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Anglo American's profit soars 1,000% thanks to China and battery demand

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·Senior City Correspondent, Yahoo Finance UK
·3-min read
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A worker at a smelting plant at Anglo American Platinum's Unki mine in Shurugwi, Zimbabwe
A worker at a smelting plant at Anglo American Platinum's Unki mine in Shurugwi, Zimbabwe. Photo: Philimon Bulawayo/Reuters

FTSE 100 (^FTSE) mining giant Anglo American (AAL.L) has reported a 1,000% increase in half-year profits, as the reopening of economies around the world leads to surging demand for metals. 

Revenue rose 114% in the first six months of the year to reach $21.7bn and profit attributable to shareholders hit $5.2bn, compared with $471m in the same period last year. The company's half-year profits are more than double what it made in 2020 as a whole.

Surging sales and profits partly reflect comparisons to an extremely tough period last year when demand collapsed due to the COVID-19 pandemic. However, the blockbuster numbers also reflect a building and manufacturing boom in parts of the world like China since economies began reopening.

"The first six months of 2021 have seen strong demand and prices for many of our products as economies begin to recoup lost ground, spurred by stimulus measures across the major economies," Anglo's chief executive Mark Cutifani said in a statement.

"The platinum group metals and copper – essential to the global decarbonisation imperative as we electrify transport and harness clean, renewable energy – and premium quality iron ore for greener steelmaking, supported by an improving market for diamonds, all contributed to a record half-year financial performance."

Anglo announced plans to return $4.1bn to shareholders in light of the results. The company will pay a $2.1bn interim dividend, a $1bn special dividend, and buy back $1bn-worth of shares.

Shares rallied 4% on the news.

Anglo American shares jumped on news of the deal. Photo: Yahoo Finance UK
Anglo American shares jumped on news of the deal. Photo: Yahoo Finance UK

News of the bumper payout comes a day after rival miner Rio Tinto (RIO.L) announced a record $9.1bn dividend on the back of similarly surging sales and profits.

Anglo American makes the bulk of its money from iron ore (TIO=F), copper (HG=F), and platinum group metals. The company said copper prices surged 66% in the first half of 2021 "with demand rebounding sharply in China, ahead of other regions".

Platinum group metal prices jumped 47% in the first half, as the closure of two Russian mines hit supply and demand surged from the rebounding car industry. Automakers use platinum group metals in catalytic converters.

Iron ore saw prices roughly double across Anglo's various mines. China is the largest importer of iron ore globally.

Nickel, a key component in electric vehicle batteries, forms a small but growing part of Anglo's business. Prices rose 40% in the period thanks to "particularly robust consumption in stainless steel and batteries".

"Our business is increasingly geared towards providing the future-enabling metals and minerals for a low-carbon economy and to meet global consumer demand trends," said Cutifani. "Combined with our commitment to carbon neutrality across our operations by 2040, we are working to meet the expectations of our full breadth of stakeholders."

Watch: Why Tesla still has more room to grow after a record-breaking quarter

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