Anglo American
07/10/2007
A new CEO makes her mark  Anglo American (LSE, AAL) shares have performed solidly thus far in 2007. This is in part due to strong ongoing sentiment in the resources sector. However, the market has also been receptive to new CEO Cynthia Carroll, who has already begun to make her mark on the mining heavyweight.
Within the space of just a few months, Ms Carroll has begun to emerge as a driving force for the company. Her immediate target is to complete the mining heavyweight's restructuring, originally initiated by her predecessor, before the year is out. The restructuring strategy aims to focus operations on commodities demanded by China's rapidly expanding economy. This involves concentrating output on iron ore, copper, nickel, platinum, diamonds, coal and zinc. In order to achieve this, management have budgeted US$7 billion on increasing capacity at existing mines and a further US$15 billion is under consideration for new projects. A good example of which is Anglo's expanding iron ore operations. The company recently acquired a 49 percent interest in the huge Brazilian iron-ore development, MMX Minas-Rio, for US$1.15 billion. The operation should prove a significant boost to group iron-ore production, which is targeted to reach 100 million tonnes per annum within the next five years. Also in Brazil, Anglo is developing a $1.2 billion nickel mine in Goias state. Expectations are for the mine to deliver 36,000 tonnes once production commences in 2011, with further growth thereafter. The re-structuring plan is not all about expansion though. Management are also shedding various non-core businesses, such as the recently de-merged paper and packaging subsidiary, Mondi Group. Also coming under scrutiny is UK based aggregates and asphalt supplier, Tarmac with suggestions that a sale could raise a little under US$6 billion. Overall, we expect Anglo's reconstruction to prove positive for shareholders, making the company more competitive against the likes of BHP Billiton and Rio Tinto. And given our bullish long-term view on commodity prices, we believe the outlook for the large diversified miners remains extremely positive. 
|