Anglo American accelerates strategy to unlock significant value

Anglo American plc announces a comprehensive strategy to streamline its portfolio and enhance shareholder returns. The plan emphasizes a focus on world-class assets in copper, premium iron ore, and crop nutrients.

Anglo American plc has unveiled a decisive strategy to unlock significant value from its portfolio, aiming to deliver stronger shareholder returns. Following a comprehensive asset review initiated in 2023, the company plans major structural changes to accelerate its strategic priorities of operational excellence, portfolio simplification, and growth.

Key Points of the Strategy

1. Undiluted Shareholder Participation:

– Focus on world-class assets in copper, premium iron ore, and crop nutrients.

– Full value transparency for shareholders.

2. Portfolio and Structure Transformation:

– 100% future-enabling portfolio including 54% copper production.

– Emphasis on products supporting energy transition, improved living standards, and food security.

3. Outstanding Organic Growth:

– Proven project delivery and sustainability leadership.

– Defined pathway to over 1 million tonnes per annum (mtpa) of copper production.

4. High-Quality Financial Profile:

– EBITDA margin increases to 46% from 31% on a 2023 pro forma basis.

– $1.7 billion lower cost in the new portfolio configuration.

5. Disciplined Capital Allocation:

– Less than 1.5x net debt to EBITDA leverage at the bottom of the cycle.

– 40% dividend payout maintained.

Portfolio Simplification

Copper:

Anglo American owns three of the top ten producing copper mines in South America, with exceptional resource endowments. The company has set a defined pathway to exceed 1 mtpa of copper production, ensuring multiple decades of competitive production and growth.

Premium Iron Ore:

Anglo American focuses on producing 100% premium iron ore products, which are crucial for supporting steel decarbonization. The company holds attractive resource endowments in Brazil and South Africa.

Crop Nutrients:

The development of crop nutrients will be slowed to support balance sheet deleveraging, with critical technical studies to be completed by 2025. Capital expenditure (capex) is reduced to $200 million in 2025, with no capex planned for 2026.

Major Structural Changes

Steelmaking Coal:

The company intends to divest its high-quality steelmaking coal business, responding to strong buyer interest.

Nickel:

Exploring options for care and maintenance and eventual divestment of the nickel business.

Anglo American Platinum:

Anglo American plans to demerge Anglo American Platinum, ensuring an orderly transition to optimize value for shareholders of both companies.

De Beers:

Exploring options for divestment or demerger to improve strategic flexibility for both De Beers and Anglo American.

CEO Duncan Wanblad’s Statement

“We set out our clear strategic priorities earlier this year – operational excellence, portfolio simplification, and growth. Our decision to focus Anglo American’s portfolio on our world-class resource asset base in copper and premium iron ore – while retaining our crop nutrients optionality at Woodsmith – marks a major new phase in executing our strategy.”

Wanblad emphasized that a simpler business structure would deliver sustainable incremental value creation through improved operational performance and cost reduction. He assured shareholders that these extensive changes would bring the full value of Anglo American’s assets to the forefront.

Operational Excellence:

Anglo American aims to simplify its structure and portfolio to facilitate a step change in performance. The company targets US$1 billion in annual savings in operating expenditure by 2024, with an additional $0.8 billion of cost reductions by the end of 2025.

Value Proposition:

The transformation of Anglo American’s portfolio will enhance value delivery for shareholders. The streamlined portfolio is uniquely positioned to benefit from global decarbonization, improved living standards, and food security.

Proven Capabilities:

Anglo American’s differentiated technical, project delivery, and sustainability capabilities are critical to unlocking the value of its resource endowments. The company’s global relationship networks and reputation as a responsible mining company will support future project execution.

Anglo American’s strategy reflects a strong commitment to operational excellence and value creation. By focusing on high-potential assets and streamlining its portfolio, the company is well-positioned to capitalize on global trends such as decarbonization and food security. The disciplined capital allocation and cost-saving measures further strengthen the financial profile, ensuring sustainable growth and returns for shareholders.