Michael Kavanagh

Anglo American has delivered a 14 per cent increase in annual operating profits to $11.1bn, broadly in line with expectations, and committed itself to expanding production and pushing ahead with an aggressive investment programme in new mining projects in spite of fears of a softening of growth in global demand for its commodities.

Cynthia Carroll, chief executive, said on Friday that constrained supply of key mining products would support demand for Anglo American?s mining output over the medium term.

?Despite short term uncertainty persisting in the global economy, particularly in Europe, the longer term outlook for Anglo American?s diversified mix of commodities remains strong. We expect sustained growth in the emerging economies, notably in China and India, which will underpin robust demand for commodities, supplemented by early recovery signs in the US.?

Ms Carroll also played down speculation over Anglo American?s independence amid talk that it might become a takeover target following the proposed merger of rival miners Xstrata and Glencore. Xstrata?s plans to merge with commodity trader Glencore would create a natural resources group with a market capitalisation of $90bn.

Xstrata tried to merge with Anglo in 2009 but was rebuffed. If the Xstrata-Glencore tie-up goes through, Anglo will be pushed from fifth to sixth in the world rankings of mining companies.

But, as she outlined Anglo American?s results for 2011, Ms Carroll insisted that the company retained sufficient financial muscle to pursue its ambitions to double production through its $98bn pipeline of more than 85 approved and unapproved projects.

Commenting on the proposed deal between Xstrata and Glencore, she said: ?This is not a big surprise. We have been expecting this transaction, the market has been expecting it for a very long time.?

She added: ?Anglo American has the scale, breadth of commodities and wherewithal to support its project pipeline, so it doesn?t change anything from a competitive standpoint.?

The company said it remained confident that it could deliver a 35 per cent increase in organic production growth by 2014 after commissioning three new projects in 2011 on or ahead of schedule – its Kolomela iron ore mine in South Africa, the Los Bronces copper expansion in Chile and the Barro Alto nickel mine in Brazil.

At peak production levels, Los Bronces in Chile is expected to be the fifth largest producing copper mine in the world.

However, Anglo American faces a legal challenge to the sale of its 24.5 per cent stake in Anglo American Sur, which owns a number of other copper assets in Chile, to Mitsubishi for $5.39bn in November. Anglo American also said it would ?continue to defend its rights vigorously? in a legal dispute over the sale with Codelco of Chile.

It added that it remained ?open to working with Codelco to reach a settlement that recognises the strength of Anglo American?s legal position?.

The company, which in November also announced an agreement to pay $5.1bn to acquire the Oppenheimer family?s 40 per cent interest in the De Beers diamond business, extending its stake to 85 per cent, ended 2011 with net debt of $1.4bn, down $6bn on the previous year.

Anglo American?s bullish stance on continued capital expenditure to raise output across its basket of commodities also prompted a modest 15 per cent increase in its final dividend to 46 cents, bringing the total for the year to 74 cents, up from 65 cents in 2010.

Profits at Anglo American?s coal divisions rose sharply, while its diamonds, iron ore and manganese divisions also delivered healthy improvements in earnings. But its copper operations saw operating profits dip by 13 per cent because of lower sales and higher costs. Higher labour and energy costs also dragged down profits growth from its platinum business, which was hit by the deaths of 12 workers during the year.

Group revenues rose by 11 per cent to $36.5bn as underlying earnings rose from $5bn to $6.1bn. Pre-tax profit slipped by 1 per cent to $10.8bn, generating earnings per share of $5.1.

In spite of the modest dividend increase, Anglo American said it continued to support the principle of returning surplus cash to shareholders, ?after taking into account the group?s substantial investment programme for future growth, future earnings potential and the continuing need for a robust balance sheet?.

Shares in Anglo American, down 19 per cent over the year, opened up 20? p at ?26.64? in London on Friday morning.

In a note on Friday, analyst Charles Cooper at brokers Oriel Securities

described the results as ?broadly in line with expectations? as was the final dividend, but added that ? no special dividend was announced which could disappoint?.