Anglo American shares fall to record low in London, more pain in prospect

By Thomas Biesheuvel

(Bloomberg) — Anglo American Plc fell to a record low in London, leading mining shares lower, as investors seek more information from the second-worst performer in the U.K.’s benchmark stock index on its strategy to deal with tumbling commodity prices.

On Friday Anglo sank 8.2 percent to close at 400.15 pence in London, the lowest since its May 1999 listing. The 13-member FTSE 350 Mining Index declined 3.7 percent. Anglo, hosting an investor day on Dec. 8 to update shareholders on its plans, is down by two-thirds this year.

A worker walks past a board outside Anglo American offices in Johannesburg, August 21, 2015. South Africa stocks ended weaker on Thursday, despite strong gains by resource stocks, with MTN the main loser among blue chips because most of its business is in emerging markets. Shares slumped across the board on the JSE as comments by U.S. Federal Reserve chair Janet Yellen, made after the close in Asia, Europe and South Africa on Wednesday, hit the markets on Thursday. REUTERS/Siphiwe Sibeko
A worker walks past a board outside Anglo American offices in Johannesburg. REUTERS/Siphiwe Sibeko

Investec and HSBC Holdings Plc are among banks that expect Anglo to cut or scrap its dividend. HSBC said on Wednesday that even after cutting costs and potentially scrapping its payout to shareholders, the mining company will continue to burn through cash. Metals prices have fallen to the lowest levels in six years as China, the biggest consumer of raw materials, suffers from slowing economic growth.

Read also: As Glencore leads, Anglo will follow – cut dividend, rights issue on cards

The Chinese-led slump in natural resource prices has undermined Anglo Chief Executive Officer Mark Cutifani’s efforts to turn around the fortunes of a business that mines platinum and diamonds inAfrica and iron ore in Brazil. He’s seeking to raise $3 billion by selling assets and cutting jobs to trim costs and reduce debt.

Anglo has already raised about $2 billion this year offloading its tarmac business, two copper mines in Chile and platinum assets in South Africa. The company said in July it had net debt of $11.9 billion, with a long-term borrowing target of $10 billion to $12 billion.

Glencore, the only FTSE 100 member to lose more value this year, has scrapped its dividend and raised $2.5 billion through a share sale. Glencore fell 4.2 percent to 91.88 pence on Friday in London, while BHP Billiton Plc declined by 3.1 percent to 807.6 pence.

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