Anglo American, a diversified mining giant, is planning to restructure its portfolio by demerging its South Africa-based Anglo American Platinum (Amplats) and considering the divestment or demerger of De Beers, its diamond unit. This strategic shift comes after rejecting BHP’s second takeover offer, showing Anglo’s intention to focus on its more profitable segments—copper, iron ore, and a new venture in crop nutrients.
Anglo American’s Chief Executive, Duncan Wanblad, announced during a press conference that the company plans to reshape its portfolio by divesting from its listed entities on the Johannesburg Stock Exchange, including Amplats and De Beers, as well as its steelmaking coal interests in Australia and nickel holdings. The review, prompted by the BHP bid, aims to streamline Anglo into a higher-margin business with robust cash flow.
The expected financial benefits are compelling: Anglo forecasts a 15% increase in its EBITDA margin, elevating it to 46%. Additionally, the operating cash conversion is projected to surge from 44% to 78%, with a return on capital expected to rise from 18% to 25%. This reconfiguration is projected to save the company $1.7 billion compared to its current operational costs, with an anticipated $800 million in additional pre-tax, recurring annual revenue by the end of 2025.
On the diamond front, De Beers is in the process of finalizing a sales agreement with the Botswana government, exploring strategic options to enhance its value post-separation. Meanwhile, Anglo’s renewable energy ambitions remain strong. Earlier this year, Anglo and EDF Renewables launched Envusa Energy, completing project financing for three wind and solar projects in South Africa. These projects, located at the Koruson 2 cluster, are expected to generate 520 MW of power, with Amplats, Kumba, and De Beers securing 20-year offtake agreements.
Wanblad also highlighted Anglo’s commitment to sustainability, particularly through the development of a hydrogen-powered truck at Amplats’ Mogalakwena mine in Limpopo. This initiative has been spun off into a separate entity to attract investment for scaling up green hydrogen mine haulage. The transition to hydrogen, essential for reducing Scope 1 and Scope 3 emissions associated with diesel use in mining, represents a significant step towards the decarbonization of the industry.
This strategic overhaul is not just about financial optimization but also aligns with global trends towards sustainable mining practices and the decarbonization of essential industries. The quality of Kumba’s iron ore in Northern Cape and Minas-Rio in Brazil positions it well for the burgeoning green steel industry, which relies on direct reduction iron—a process critical for steel’s decarbonization.
The planned demerger of Amplats and the potential divestment of De Beers are set to unlock substantial value for Anglo-American, allowing each entity to focus on core areas and maximize their potential independently. As Anglo redefines its global strategy, these moves are expected to enhance shareholder value, streamline operations, and reinforce its commitment to environmental stewardship.
In conclusion, Anglo-American’s strategic pivot reflects a broader industry trend towards specialization and sustainability. By focusing on its high-margin businesses and investing in green technologies, Anglo not only anticipates improved financial performance but also aligns itself more closely with global environmental objectives, ensuring its relevance and resilience in a rapidly evolving market.
Source: Mining Weekly
