Anglo American resumes dividend payment six months early

* Net (LSE: 0LN0.L - news) debt to EBITDA ratio less than 1

* Need to start again on South African mining charter

* Share (LSE: SHRE.L - news) price rises (Adds detail, quotes, share price)

By Barbara Lewis

LONDON, July 27 (Reuters) - Anglo American (LSE: AAL.L - news) on Thursday said it was resuming dividend payments six months early after a "relentless focus" on cost-cutting combined with higher commodity prices had cut debt and increased cash flow and underlying earnings.

Anglo was among the miners hardest hit by a slump in commodity prices in 2015 and was forced to suspend its dividend. Last year it led gains on Britain's benchmark FTSE 100 index and has risen a further 6 percent this year.

Net debt fell to $6.2 billion by the end of the first half, below a year-end target of $7 billion, and free cash flow rose to $2.7 billion.

Underlying earnings before interest tax, depreciation and amortisation (EBITDA) for the first six months rose by 68 percent to $4.1 billion, in line with analyst forecasts according to a consensus provided by the company.

The ratio of net debt to annualised EBITDA stood at 0.8 times. A level of around one or lower is a strong measure of balance sheet health in the capital intensive mining industry.

Share prices rose 3.5 percent by 0718 GMT.

The combination of lower net debt and healthy cash flow has allowed the company to bring forward the resumption of dividend payments, previously expected around the end of the year, to a first-half payment of 48 cents per share, or 40 percent of underlying earnings.

Chief Executive Mark Cutifani said a "relentless focus on driving efficiency" had resulted in "a step-change in operational performance and profitability".

Looking ahead, he said the drive for cost-cutting would continue and the company could also consider growth, although he did not specify where.

Anglo American is no longer embarking on any new formal asset disposal processes, he said, although it is completing some announced sales that should reduce the portfolio to around 35 assets - down from 37 now and 68 in 2013.

At the same time, production has increased, he said, with each employee producing 70 percent more than in 2013.

Anglo American still faces big challenges, especially in South Africa, where the industry is opposing the government's plans to revise the mining charter.

Cutifani told reporters on a conference call, there was a need to start from scratch.

"It's confused and it's confusing and it does not work for anyone," he said of the charter. "It would not work in any jurisdiction... We just have to start again." (additional reporting by Sanjeeban Sarkar in Bengaluru; editing by Jason Neely/Keith Weir)