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Anglo American profits hit by weak commodity prices

Aug 3, 2009

LONDON (AFP)— Global mining giant Anglo American said on Friday 31 July its first-half net profit fell 30.6 percent as a result of weak commodity prices arising from the worldwide economic downturn.

Net earnings dived to 2.97 billion dollars (2.11 billion euros) in the six months to June, compared with 4.28 billion dollars in the same period of 2008.

Revenues sank 37.9 percent to 11.13 billion dollars, the group added in a results statement.

Anglo, which last month rejected a merger bid by its Swiss rival Xstrata, said it has shed 15,400 of the 19,000 jobs it had announced would go this year.

The London-based company, which wants to achieve 2.0 billion dollars of cost savings by 2011, said it had delivered 450 million dollars of savings in the first half.

"As expected, the market environment has been challenging in the first half of 2009 and Anglo American's performance was impacted by the sharp declines in commodity prices against the prior year and anticipated reductions in volumes," Chief Executive Cynthia Carroll said in the earnings release.

"We took early and decisive action in order to respond effectively to the global economic downturn," said Carroll, who has headed the Anglo-South African firm since March 2007.

"We have focused on driving operational performance, preserved capital through halving our planned capital expenditure for the year, scaled back higher cost production and growth plans in platinum and coal, and suspended dividend payments."

She added that the mining company was ahead of its plan to reduce the global headcount and has cut 15,405 jobs so far this year.

The possible tie-up between Anglo American and Xstrata was the latest sign of consolidation pressure in the sector after the collapse of a deal by Rio Tinto with a Chinese firm.

Anglo has described the Xstrata merger as "unattractive" for shareholders with terms that were "totally unacceptable."

Carroll acknowledged on Friday 31 July that the episode had been a "distraction" for shareholders and management alike.

"It is a distraction, it is a distraction for all of us. But on the other hand, we have to get the full value of Anglo American to our shareholders," Carroll said in an interview posted on group's website.

Anglo American is a diversified group which produces platinum, coal and base metals such as copper, zinc and nickel. It also has a 45-percent stake in De Beers, the world's largest diamond company.

It is the biggest mining company in South Africa and generates around two thirds of its earnings there.

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