Costs weigh on Anglo American as profits drop

Miner Anglo American saw profits drop almost 40 per cent in the first half of the year as faltering global economic growth hit the prices of key commodities like iron ore and platinum, but failed to bring down costs.

The trend of weaker prices and still-rising costs has battered the major miners that have reported so far, including Brazil's Vale, which posted its worst earnings in two years when it reported second-quarter results earlier this week.

Anglo, the first UK-listed mining major to report first-half earnings, came in below expectations with a 38 per cent drop in operating profit to $3.7bn (£2.4bn) below a company-compiled consensus forecast of $4bn.

Underlying earnings per share came in at $1.38, almost half the level for the same period last year and again below expectations.

Anglo units Kumba Iron Ore, Amplats and De Beers have all reported a weak first half. Kumba, which Anglo regards as one of its most promising assets, saw profits drop 18 per cent, while Anglo's share of De Beers profits fell over 40 per cent and earnings at the platinum unit were down almost 80 per cent.

Anglo, facing challenges in its efforts to secure licences, has also been forced to delay the shipment of first ore from its key Minas Rio iron ore project in Brazil to the second half of 2014.