UPDATE: Anglo American 1H Beats Views; Minas Rio Delayed

30th Jul 2010 13:09

(Adds details.) By Alex MacDonald Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Global diversified miner Anglo American PLC (AAUK) reinstated its dividend after announcing better-than-expected first half results, but said its flagship Minas Rio iron ore project in Brazil faces delays and rising costs. The miner wasn't able to forecast an accurate final capital expenditure figure for Minas Rio, but analysts expect the project will cost at least 20%, or $750 million, more to build than earlier company estimates. Anglo American said it will incur costs of $180 million each quarter as it waits an estimated nine months to obtain critical licenses, and another $210 million in costs for changes to the project. The project is now slated to start production in 2013 at the earliest, Chief Executive Cynthia Carroll said. Anglo had expected the 26.5 million metric tons a year project to start producing ore in the second half of 2012 at a cost of$3.8 billion. The project's capital expenditure is now estimated at $4.55 billion. "A number of key approvals remain outstanding and these are on the critical path of the project, therefore impacting the time and cost to complete," Carroll added. Analysts and investors are keeping close tabs on the project as the company seeks to increase output in its key seven commodities by a third by 2013. "The next phase of performance has to be driven by real cost reductions and successful project progression," Credit Suisse analysts said in a note. Anglo American's two other flagship projects, the Los Bronces copper expansion project in Chile and the Barro Alto nickel project in Brazil, remain on track to start production in 2011. Anglo's first-half operating profit more than doubled to $4.36 billion from $2.1 billion in the same period a year earlier as demand and prices for its commodities rose. The figure beat analysts' expectations of $4.2 billion in a company survey of 12 analysts. Underlying earnings, which management believes is a more accurate reflection of the company's performance, also more than doubled to $2.21 billion from $1.1 billion. Underlying earnings strips out special items and remeasurements. Net profit attributable to equity shareholders fell to $2.06 billion from $2.97 billion after the sale of its stake in AngloGold Ashanti sweetened year-ago results. Anglo American reinstated its interim dividend of $0.25 a share Friday to reflect the miner's improved operating performance and financial position, as well as progress on non-core asset sales and a positive medium term outlook. The miner last year cut the dividend for the first time since World War II as it faced heavy debt and uncertain markets. At 1157 GMT, Anglo's shares were up 0.4% or 10.5 pence at 2551.50p while most of the U.K.-listed mining companies were down. Company website: http://www.angloamerican.co.uk -By Alex MacDonald, Dow Jones Newswires; 44 20 7842 9328; [email protected] (END) Dow Jones Newswires July 30, 2010 08:09 ET (12:09 GMT)