London: Anglo American PLC’s shares fell to a record in London, leading resource companies lower, as investors seek more information from the management of the second-worst performer in the U.K.’s FTSE 100 index on its strategy to deal with tumbling commodity prices.
Anglo sank as much 6.7 per cent to the lowest since May 1999 and traded down 5.9 per cent at 409.95 pence by 10.21am local time. The 13-member FTSE 350 Mining Index declined 2.5 per cent. Anglo, hosting an investor day on Dec. 8 to update shareholders on its plans, is down by two-thirds this year.
“We have to see the business adapt to this increasingly harsh environment and see what levers they have available,” said Marc Elliott, an Investec Plc analyst in London. “There are levers they can pull on. The current challenges are only accelerating the pressure to do so.” Elliot has a hold rating on the stock.
Investec and HSBC Holdings Plc are among banks that expect Anglo to cut or scrap its dividend. HSBC said on Wednesday that even after cutting costs and potentially scrapping its payout to shareholders, the mining company will continue to burn through cash. Commodity prices have fallen to the lowest levels in six years as China, the biggest consumer of raw materials, suffers from slowing economic growth.
Chinese Slump
The Chinese-led slump in natural resource prices has undermined Anglo Chief Executive Officer Mark Cutifani’s efforts to turn around the fortunes of a business that mines platinum and diamonds in Africa and iron ore in Brazil. He’s seeking to raise $3 billion by selling assets and cutting jobs to trim costs and reduce debt.
Anglo has already raised about $2 billion this year offloading its tarmac business, two copper mines in Chile and platinum assets in South Africa. The company said in July it had net debt of $11.9 billion, with a long-term borrowing target of $10 billion to $12 billion.
Glencore, the only FTSE 100 member to lose more value this year, has scrapped its dividend and raised $2.5 billion through a share sale. Glencore fell 1.5 per cent to 94.48 pence on Friday in London, while BHP Billiton Plc declined by 2.3 per cent to 813.9 pence.
