Anglo American Plc and Teck Resources Ltd. became the latest mining behemoths to post steep falls in profit as China’s economic slowdown dampens earnings.
(Bloomberg) — Anglo American Plc and Teck Resources Ltd. became the latest mining behemoths to post steep falls in profit as China’s economic slowdown dampens earnings.
Just two years ago the mining industry was at its zenith, with booming demand and supply bottlenecks pushing many commodities to all-time highs as the world exited the Covid-19 pandemic. Yet since then, the steam has come out of the global economy and China’s crucial property sector, which sucks up much of the world’s iron ore, has started to wobble.
Anglo American reported a more than 40% fall in underlying earnings to $5.1 billion, while cutting its dividend in half to $700 million from the same period in 2022. Teck posted an even sharper drop in second-quarter profit of over 50% to C$1.48 billion ($1.1 billion).
“We’ve been a little bit surprised by how slow the reopening of China has been and the lack of stimulus that I think everyone expected,” said Anglo Chief Executive Officer Duncan Wanblad. “What we are certain about is that there will be a recovery, what we are not certain about is the length of time it will take.”
China’s output grew more slowly than expected last quarter and other data is flashing warning signs on everything from consumption to trade. Top Chinese leaders have signaled a more “dovish” stance on policy going forward, but are still likely to hold off on massive stimulus.
Anglo and Teck’s results follow close on the heels of Rio Tinto Plc, which reported Wednesday. The No. 2 miner saw both its profit and payout fall by about a third.
Anglo’s Wanblad also announced more management changes on Thursday. The relatively new CEO has overhauled the company’s leadership since taking the helm last year and today announced John Heasley as finance director, with the The Weir Group Plc finance head replacing Stephen Pearce. Craig Miller will take over as CEO of Anglo subsidiary Anglo American Platinum Ltd. in October. He is currently finance director.
Teck, which has spent much of this year fending off a hostile approach from Glencore Plc, faced another setback at its flagship copper mine in Chile, saying it would produce less metal this year than earlier forecast.
Teck said it will now produce between 330,000 tons and 375,000 tons of copper this year, compared with earlier guidance of 390,000 tons to 445,000 tons, after delays in ramping up production at its Quebrada Blanca 2 project.
Teck has spent much of this year engaged in a bruising fight with Glencore Plc after the Swiss commodities trader made an unsolicited offer for the Canadian company. While Teck’s copper business, and especially QB2, was originally the main target for Glencore, the latest twist in the saga came last month, when Glencore proposed buying Teck’s steelmaking coal business for about $8 billion as an alternative to its full takeover bid.
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