Anglo feels the pinch

September 7, 2001 Posted: 0747 GMT

LONDON (CNN) -- Slowing economies have hit prices of metals and other materials, denting half-year profit at Anglo American, the world's top gold producer.

Anglo posted a 7 percent decline in first-half earnings as gold, copper, zinc and pulp prices fell.

The company, which owns 45 percent of diamond miner De Beers, said post-tax profit fell to $884 million, or 58 cents a share, excluding one time items, from $951 million, or 61 cents a share, a year earlier.

Mining analysts polled by Reuters forecast profit in the range of $830 million and $1 billion.

Including the disposal of financial services group FirstRand and the increase of its stake in De Beers first-half net profit more than doubled to $2.7 billion.

Anglo's stock was down 6.3 percent at 889 pence in a falling London market on Friday morning. That leaves it 28 percent below its peak for the year of 1,236 pence, recorded in May.

Global players in the mining sector are combining in a bid to cut costs as lower selling prices undermine their returns. Australia's BHP and Britain's Billiton agreed to merge in March to create the world's second-largest miner.

Earlier this week, Anglo's subsidiary AngloGold launched a $1.7 billion friendly takeover bid for Normandy Mining, Australia's largest and the world's seventh-largest gold producer

"The global slowdown has adversely impacted Anglo American's results in the first half," the company said.

"Any improvement in the global economy is unlikely to result in price recovery in the near term. In this environment, Anglo American will continue to focus on improving efficiencies and reducing cost.. whilst  assessing new opportunities for investment and expansion."

The company plans to cut costs by $84 million and expects to reduce its exploration expenditure by $17 million.

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