JOHANNESBURG (miningweekly.com) – By the end of 2025, the new Anglo American is going to be focused 100% on copper, iron-ore and crop nutrient mining.

By that time, the demerged Johannesburg Stock Exchange-listed Anglo American Platinum will have a secondary listing in London, and on their separate ways will be Anglo's De Beers, steelmaking coal and nickel businesses.

What is described as simplification and transformation will have taken place, which prompted this comment from upbeat Anglo CE Duncan Wanblad: “We’ll be in a substantially more resilient financial position, with considerable growth optionality embedded within the portfolio.” (Also watch attached Creamer Media video.)

Plus points are that its copper mines in South America provide an organic pathway to 30% near-term production uplift, and the iron-ore mines of South Africa and South America benefit from through-the-cycle cash generation potential as a consequence of lump and direct reduction iron (DRI) price premiums.

With its Woodsmith project, the new Anglo will also have a food security option, which it believes encompasses one of the best megatrends of today's markets.

“As a result, we believe that this business will be valued much more positively by the market,” Wanblad told investment analysts amid commitment to transform the business over the next 18 months.

“The new Anglo has an incredibly powerful investment case, one that is far more focused with a high-quality set of portfolio assets, which means growth optionality that we already own.

“With our assets housed in a much simpler structure going forward, we can deliver material cost savings, and transform our Ebitda margin.

“We’re confident that we’re reshaping this company to be a more financially resilient one, driving improved through-the-cycle performance that will maximise value recognition by the market,” Wanblad explained during the Johannesburg- and London-listed company’s half-year results presentation covered by Mining Weekly.

Legal, technical accounting and commercial work streaming and engaging with some buyers is underway.

“Alongside that, we have a team focused on the organisation design work to make sure that we are ready to execute as soon as each of these processes is complete, without any concerns to business continuity, or on delivering our efficiency targets.

“We then have a very tight team at the centre of all of this, to make sure that we manage all the critical interdependencies across all of these processes.”

Starting with the disposal of the steelmaking coal in Australia, Anglo reported that it is “moving at full speed with the sale process”.

“At Nickel, our intervention to limiting price pressure on cash flow has already delivered some results and we’re well positioned to progress with our preferred option of a sale.

“At Anglo Platinum, we’re well on track for a 2025 execution. Teams are working together to be able to deliver the separation as effectively and as efficiently as possible.

“Whilst our prior experiences with the likes of Mondi and Thungela were for the demerger process to take more than 18 months, we’re well set to move more quickly given that Anglo Platinum already has listed company processes, systems and governance structures in place.

“That significantly accelerates this particular process, although it is important to flag that there are some complex separation pieces of work that will need to be done, as many of the functions are very closely integrated with a greater Anglo group.

“We want to make sure that Anglo Platinum gets done in the right way and sets this business up to deliver its tremendous potential too.

“Success involves getting the separation right plus ensuring that the right actions are taken in managing flow back proactively.

“Alongside its primary listing remaining on the Johannesburg Stock Exchange, we’re therefore looking at the potential of a secondary listing of Anglo Platinum on the London Stock Exchange and these processes are now underway,” Wanblad outlined.

Given that the diamond industry has been through many twists and turns over time, De Beers itself is considered as being best positioned in this industry to be able to navigate these twists and turns.

“We’re therefore very focused on setting the business up for the future, and will exit for value most likely later in 2025.

“In parallel to all of these processes, we’re designing the organisation which will support the separation and ultimately simplify the structure for the new Anglo.

“Agility and accountability are key here. We expect to work through this transition pathway to implementation of our future organisation, as these divestments and demergers complete,” Wanblad expanded further.

ORGANIC OPTIONALITY

While the immediate focus is on operational excellence and delivering on portfolio transformation, there is also growth opportunity, with the value of organic optionality being emphasised.

A pathway to exploit the outstanding geological potential of the three copper mines, together with the greenfield Sakatti copper/nickel/platinum project in Finland, exists.

Collectively, this targets million tonnes of copper production a year, with further expansion upside potential, as well as other growth opportunities targeted over time.

“We continue to progress these growth options with our sustainability-focused approach. Once these projects are ready to be progressed, the high return potential for these brownfield expansions will see our growth capital allocated to them.

KUMBA IRON ORE

South Africa’s Kumba Iron Ore, particularly its lump ore in the well-endowed Eastern Cape, enables more carbon efficient transitional steelmaking processes and Minas Rio in Brazil produces quality DRI ore.

As the global steel industry decarbonises, even more significant premiums emerging for these types of products is on the cards.

The Woodsmith crop nutrient mining project in England is seen as having the potential to deliver cash flow but against the backdrop of nearer-term priorities including the deleveraging of Anglo’s balance sheet resulting in a decision to slow the project down.

Sinking of the production shaft has been paused and continuing service shaft work is providing data for a feasibility study to make the project marketable to a joint venture partner.

While the tunnel boring machine undergoes planned maintenance, one of the ventilation shafts is being connected to the tunnel, after which tunneling will continue but at a considerably slower rate than prior to the shutdown.

During the slowdown period, the existing study and engineering programme will continue to support optimisation of the business case.

The revised development plan will support the final investment decision when the group's balance sheet is suitably leveraged and the pathway is clear.

“I continue to believe that this project will represent a cornerstone of the portfolio in the future,” said Wanblad.

Tight discipline is being exercised to optimise capital allocation and free cash flow generation.

“We are structurally improving the operational leverage of this business to maximise the value of each and every asset, regardless of whether they remain in our ownership are not.”

In parallel, the portfolio is being transformed and the divestment programme executed.

“By the end of next year. I’m confident that we will deliver a portfolio whereby the value of our assets and their growth potential can be fully recognised by the market.

“We’re reshaping this business into the next generation mining company with considerable strategic flexibility.

“We have our eyes firmly on the prize at the end of it all,” Wanblad emphasised.