Johannesburg - Anglo American [JSE:AGL] said it expects to record non-cash impairments of $3bn to $4bn relating to its iron-ore operations in Brazil and some Australian coal assets as prices declined.
“The first six months of 2015 have seen significant further weakness and ongoing volatility in the prices of the bulk commodities, particularly iron ore and metallurgical coal,” the company said in a statement on Thursday.
“Anglo American has therefore reviewed its near- and longer-term commodity-price assumptions at the mid-year.”
The write down comes as prices for copper, iron ore, thermal coal and platinum, representing half of Anglo’s revenue last year, are trading in or close to bear markets. The company is bringing the Minas-Rio iron-ore operations in Brazil to full output as prices of the steelmaking ingredient fell 37% in the year ended June.
The biggest producers, including BHP Billiton [JSE:BIL], fuelled a supply surplus by boosting low-cost output even as the economy of China, the biggest buyer, grew at the slowest pace in more than two decades.
Minas-Rio’s output was 1.8 million metric tons in the three months ended June 30 compared with 1.2 million tons a quarter earlier.
Production of thermal coal for export from Australia climbed 38% to 1.3 million tons from a year earlier, Anglo said.