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Anglo American head avoids feeling complacent

London - Mark Cutifani is avoiding the temptation to feel complacent. The head of Anglo American [JSE:AGL] has seen the miner’s share price almost triple this year, topping gains in the benchmark FTSE 100 Index. But that can’t erase the bad times Cutifani’s seen since becoming chief executive officer in 2013.

"We’re not convinced the worst is behind us," he said in a Bloomberg Television interview with Manus Cranny and Caroline Hyde on Thursday. "There will be pressure on supply right across the commodity suite."

After a torrid 2015, when Anglo’s stock sank 75%, it has rebounded this year as raw materials rallied and management set out plans to exit iron ore and coal, and focus on more profitable diamonds, platinum and copper.

Other miners have also recovered this year as commodities surged the most in the first half since the 2008 financial crisis. Producers also helped by cutting output, while China’s economy stabilized and policy makers backed growth.

The recovery has led some to say the worst is over. The World Bank said on Wednesday commodities will rebound next year after hitting the bottom of the cycle. Citigroup this month said it’s bullish commodities for 2017.

Others are less convinced. Price gains in coal and copper this year have overshot and may be set to retreat, Liberum Capital analysts wrote in a note on Thursday, cutting Anglo rival Glencore Plc to a sell rating.

Cutifani warned that debt and uncertainty over China may still weigh on mining, while supply will increase for materials such as iron ore. Anglo is on target to reduce debt to less than $10bn this year, he said.

"We’re well on track to hit all our targets," Cutifani said.

"We’re prepared, we’ve done the hard work, so from our point of view we expect a better operating performance in the second half and therefore we think we can weather what the market can throw at us."

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