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Anglo American reports $1.9 billion loss and cuts dividend as restructuring continues

Anglo American, a global miner, reported on Thursday a $1.9billion loss for the first half of this year, cut its dividend and continued its restructuring efforts, which included divesting its coal and diamond units.

Since BHP failed to acquire it last year, the London-listed company has sold or spun off non-core assets in order to concentrate on its core copper and ore.

Anglo demerged their platinum business in May, and announced on Thursday that they had sold off their nickel and coking-coal assets but have not yet finalized the sale.

The company declared a $0.07 interim dividend per share. This is down from $0.42 an year ago, due to negative earnings in the platinum and coal divisions and no contribution by diamond unit De Beers.

The company posted a loss of $1.9 billion for the first six months, which is about three times the $672 million it suffered in the same time period last year.

Analysts had expected analysts to expect $2.9 billion in core earnings for the copper, iron ore, and De Beers business. Instead they reported $3 billion.

Anglo's share price fell 2.8% during the morning trading.

Duncan Wanblad, CEO of De Beers said that a formal sale process was progressing, despite the slump in diamond prices around the world. The second round of offers from interested buyers is expected to be made in the coming month.

Anglo American's other option is to spin off De Beers and eventually list it on the stock exchange. Anglo American values De Beers at $4.9 billion, after incurring $3.5 billion of impairments in the last two years.

Wanblad stated on Thursday that a trade sale is the best option. However, the trade sale must be to the right buyers. Work continues in parallel to prepare the business for IPO.

Net debt was $10.8 billion, which is below the $11.6 billion consensus estimate. Anglo expects that this will come down as soon as it receives the proceeds of the nickel and coal assets sales, and the 19.9% stake it still has in Valterra (formerly Amplats) and its platinum business.

Wanblad responded to a question about whether the company will sell the remaining stake it has in Valterra.

The miner expects to complete the deal despite a production stop caused by an April fire at one mine included in the sale of $3.78 billion to Peabody Energy.

Peabody issued a Material Adverse Change notice (MAC) to Anglo American in May, arguing that the fire and the closure of the mine was a significant development which could have allowed the buyer the right to terminate the contract.

Wanblad stated that it was up to Peabody now to decide what to do.

(source: Reuters)