Caution is the mining watchword
Anglo American’s dividend and capex shows it is less confident about the sector’s outlook than its rivals
Investors with long memories will recall that back in the early 2000s, when the rest of the mining sector was gearing up to take advantage of the surge in prices caused by China’s rapid industrialisation, Anglo American management was cutting back and selling off its assets. By the time the board was confident the recovery was sustainable and started to look around for acquisitions, asset prices were expensive and the costs of developing new mines had soared. As a result, the group underperformed the upturn. Again, as the Investec “mining clock”, which tracks typical cyclical developments, shows the industry at the beginning of another upturn, Anglo American is continuing to defer dividends and capital spending while other mining companies are showing signs of greater optimism. BHP Billiton declared an interim dividend of US40c/share, including an extra US10c above the minimum policy distribution. It plans to spend $5.6bn on capital and exploration this year, rising to $6.3bn next y...
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