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Anglo American's New Survival Strategy: What Do Investors Think? Major restructuring
Anglo American’s (AAUKY) investor day presentation highlighted the challenges faced by the broader mining industry. To return itself to health, Anglo American has announced drastic measures.
These measures include cutting its dividend, reducing capital expenditure and operating expenses, and disposing of some of its assets. All these changes are driven by a steep fall in commodity prices.
On its investor day, which was held on December 8, 2015, Anglo American’s CEO (chief executive officer) Mark Cutifani said that the deterioration in commodity prices requires “bolder action” from miners.
Since the start of 2015, Anglo American has fallen by 73% on the London Stock Exchange until December 10, 2015. Other miners, including BHP Billiton (BHP) (BBL), Freeport-McMoran (FCX), Alcoa (AA), and Glencore (GLNCY), have also fallen considerably in 2015.
Investors can consider the Materials Select Sector SPDR ETF (XLB) to get diversified exposure to the materials sector. Currently, Freeport-McMoRan forms 1.7% of XLB’s portfolio.
Negative share price reaction
Anglo American’s announcement met with a strong negative reaction from the market. Within two days of its investor day, the stock has lost 14% of its value.
Investors are likely concerned about the possibility of a failure to deliver on cost and productivity improvements while the commodity price environment remains punishing. This is particularly negative for a high–net debt company such as Anglo American. Investors are also concerned about a potential equity rise by the company if commodity prices deteriorate further.
Series overview
In this series, we’ll discuss in detail what steps Anglo American is taking to bring its operations back to health, including operational improvements, portfolio restructuring efforts, and capital allocation. We’ll also see how its management is trying to position the company in the current commodity environment.
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Anglo American plc
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PRODUCER |
CODE : AAL.L |
ISIN : GB00B1XZS820 |
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ProfileMarket IndicatorsVALUE : Projects & res.Press releasesAnnual reportRISK : Asset profileContact Cpy |
Anglo American is a nickel and zinc producing company based in United kingdom. Anglo American produces nickel, zinc, chromium, copper, gold, manganese, molybdenum, platinum, silver, uranium and zircon in Australia, in Brazil, in Canada, in Chile, in Namibia, in Peru, in South Africa and in Venezuela, develops coal, copper, gold and molybdenum in South Africa, and holds various exploration projects in Brazil. Its main assets in production are RUSTENBURG SECTION, MAMATWAN, MPONENG (WESTERN DEEP NO. 1 SHAFT), TAUTONA (WESTERN DEEP NO.3 SHAFT), MARIKANA, WESSELS and PALABORA MINE AND SMELTER in South Africa, COLLAHUASI MINE, MANTOS BLANCOS and MARICUNGA in Chile, CODEMIN in Brazil, NAVACHAB MINE and SKORPION MINE in Namibia, LOMA DE NIQUEL in Venezuela, GEMCO in Australia, QUELLAVECO in Peru and CALLINAN MINE in Canada, its main assets in development are ZONDAGSFONTEIN and PEBBLE in South Africa and its main exploration properties are LISHEEN and RATHDOWNEY TREND / MOATE in Ireland, SAN FERNANDO and PINABETE in Mexico, 777 PROJECT, BAY PAINE, NUVILIK, MUSKOX, RIVER VALLEY, RAGLAN / BELANGER and WEST RAGLAN in Canada, BOYONGAN (NORTH) in Philippines, RAKKURIJARVI in Sweden, ATASPACA and ANTAY in Peru, KOLWEZI in Congo Dem. Rep. of, SALOBO and ARIPUANA / AREX in Brazil, PLATREEF and SPITZKOP ZINC in South Africa and ZAMBEZI in Zambia. Anglo American is listed in Germany, in United Kingdom and in United States of America. Its market capitalisation is GBX 3 099.1 billions as of today (US$ 3 605.6 billions, € 3 368.0 billions). Its stock quote reached its lowest recent point on May 12, 2017 at GBX 1 001.00, and its highest recent level on April 24, 2024 at GBX 2 205.00. Anglo American has 1 405 465 000 shares outstanding. |