Anglo American's $4 billion hit clears decks for new CEO
By Sarah Young and Brenda Goh
LONDON (Reuters) - Anglo American AAL.L took a $4 billion hit to its Minas Rio project on Tuesday, clearing the decks for new boss Mark Cutifani and indicating that the delayed Brazilian operation will eventually get off the ground.
Minas Rio, which is now costing Anglo more than three times its original estimates, has been seen as Anglo's most significant failure of recent years and is partly responsible for costing outgoing chief executive Cynthia Carroll her job.
The writedown to the valuation of the huge iron ore project and a jump in the bill for its development to $8.8 billion, alongside a planned overhaul for the company's troubled platinum business, are as near to a clean slate as new CEO Cutifani is going to get.
Shares in Anglo American gained 2.2 percent to 19.14 pounds ($30.06), topping Britain's blue-chip leader board in midday trading after the announcement of the impairment charge.
"The Minas Rio impairments give the incoming CEO a clean slate, creating a degree of positive sentiment," Bernstein analyst Paul Gait said.
"The greater detail and clarity on the progress of Minas Rio can only increase the confidence around the executability and delivery of the project."
Designed to help to diversify a company that was still dependent on South Africa for the bulk of its revenue, Minas Rio was bought by Anglo for $5.5 billion in two stages in 2007 and 2008.