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Anglo remains in the red on coal writedown

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World Coal,

Anglo American saw its loss reduced to US$364 million in 1H16 compared to US1.92 billion in the firs six months of 2015, the company has reported in its interim results, on the back of an impairment of its Australian metallurgical coal assets.

The company took a “commodity price-drive” write-down of US$1.2 billion on its Moranbah and Grosvenor coal assets – assets that it is currently trying to sell.

Excluding the write-down, Anglo’s coal earnings (before interest and tax) were down at US$160 million compared to US$267 million in 1H15 on coal sales of 46 million t, a fall of 3.3 million t on the year before.

Coal prices were down across the board. Realised prices the company’s metallurgical coal fell 23%, resulting in EBIT from its Australian coal operations falling US$41 million to US$60 million. Metallurgical coal prices did, however, start to show signs of recover in 1H16 as supply balanced and there was stronger demand from India and China.

The spot metallurgical coal prices averaged US$91 per tonne in 2Q16, up 19% on the previous quarter.

Meanwhile prices for the company’s Australian thermal coal exports fell to US$47 per tonne compared to US$61 per tonne the year before. Prices for South African exports fell similarly to US$50 per tonne from US$60 per tonne, while Colombian thermal coal pries fell to US$47 per tonne from US$58 per tonne.

South African domestic sales were steadier, averaging US$16 per tonne compared to US$18 per tonne the year before.

Underlying EBIT from the Anglo’s South African coal operations fell 10% to US$116 million on the back of a US$85 million hit from reduced prices and an 11% fall in export sales, although this was partially offset by reduced costs.

In Colombia, underlying EBIT fall by 87% to US$8 million on the back of the weaker prices. In response, production was cut to remove higher-cost capacity, while operations also benefitted from the significant cost-reduction programmes run last year.

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