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Recent developments

On 4 March 2019, Moody’s upgraded Anglo American to Baa2 with a stable outlook from Baa3 with a positive outlook.

The rating agency stated that the upgrade “reflects the sustained improved financial profile and continued conservative management of the balance sheet structure and leverage profile of the company.

On 5 March 2019, S&P upgraded Anglo American to BBB with a stable outlook from BBB- with a positive outlook.

The rating agency stated that the upgrade was as "Anglo American’s 2018 results were above our expectations and we forecast that its performance will remain strong for the next few years."

Credit rating

Credit Rating(1) Rating Outlook Date set
Standard and Poor’s BBB Stable 5 March 2019
Moody’s Baa2 Stable 4 March 2019

(1) As at 5 March 2019

Net debt management

The Group’s policy is to hold the majority of its cash and borrowings at the corporate centre. Business units may from time to time raise borrowings in connection with specific capital projects, and subsidiaries with non-controlling interests have borrowings which are without recourse to the Group. Other than the impact of South African exchange controls, there are no significant restrictions over the Group’s ability to access these cash balances or repay these borrowings.

As the Group operates in South Africa the existence of exchange controls may restrict the use of certain cash balances. The Group therefore monitors the cash and debt associated with these operations separately. These restrictions are not expected to have a material effect on the Group’s ability to meet its ongoing obligations.

Access to cash

The majority of the Group’s cash is held at the London or South African Corporate Centres. It is company policy for excess cash balances to be repatriated to the Corporate Centres by way of dividends or deposits. The remaining cash balances are held by the businesses for local working capital purposes.

Cash held at the London Corporate Centre and by the Copper and Coal Australia businesses is primarily invested in highly rated, instant access USD denominated money market funds. Cash held in South Africa is first applied inter-group and any residual cash is invested in similar highly secured funds, bank deposits as well as Government bonds through repo funds.

South Africa operates exchange controls which restrict the use of cash balances outside the country. Under the terms of its listing in 1999, the Group is able to remit cash earned from operating activities in South Africa to the London Corporate Centre, with the amount capped at the level of the Anglo American plc dividend to shareholders. The remittance of any cash balances outside of these parameters would require South African Reserve Bank approval. These restrictions do not have a material impact on the Group’s ability to meet its ongoing obligations.

Liquidity

At 31 December 2019 the Group maintained a conservative liquidity position of $15.0bn comprised of $6.3bn of cash and $8.7bn of undrawn committed bank facilities. As part of the Group cash pooling arrangement cash that is legally owned by South African companies is managed outside of South Africa. The below breakdown of net cash represents cash managed in Rest of the World and South Africa.

US$ bn Cash Total committed bank facilities Drawings under committed facilities Undrawn committed facilities Total Available Liquidity
Rest of World 5.9 7.0
0.8 6.2
12.2
SA 0.4 2.5 0.0 2.5
2.8
Group 6.3 9.5
0.8 8.7
15.0

Of the following committed bank facilities, only Anglo American Capital’s Revolving Credit Facility is guaranteed by Anglo American plc. On 8 February 2019, the Group extended the maturity of $4.3bn of its revolving credit facility by one year from March 2023 to March 2024. Subsequent to this the Group exercised its second extension option on 10 February 2020 extending the maturity of $4.3bn of the facility by a further year and $0.2bn by two years to March 2025. As at 31 December 2019 the material committed bank facilities comprised of the following.


 Currency Total committed bank facilities (bn) Drawings under committed facilities (bn) Undrawn committed facilities (bn) Maturity Covenants
Anglo American Capital  USD 4.7 - 4.7(1) 2025 None
Anglo American South Africa  ZAR 15.2 - 15.2(2) 2020 - 2022 Yes(3)
Anglo American Platinum  ZAR 11.4 0.3 11.1(4) 2020 - 2024 Yes(3)
Kumba Iron Ore  ZAR 8.0
- 8.0 2024 Yes(3)

1. Pricing on the Core Credit facility is subject to a credit rating margin grid with a floor at BB+ (S&P) and Ba1 (Moody's).
2. Includes ZAR2.2billion in respect of facilities with 364 day maturity and ZAR1.7 billion in respect of facilities with 18 month maturity which roll automatically on a daily basis, unless notice is served.
3. Financial covenants are based on maximum net debt to tangible net worth ratios and minimum tangible net worth values.
4. Includes ZAR1.0 billion in respect of facilities with 364 day maturity and ZAR2.3 billion in respect of facilities with 18 month maturity which roll automatically on a daily basis, unless notice is served.

Drawn debt maturity profile

At 31 December 2019, the group had $10.3bn of senior unsecured bonds outstanding in the European EMTN, US144a, and South African DMTN markets. The bonds have a balanced maturity profile through to 2029. All the Group’s bonds in issuance are guaranteed by Anglo American plc. None are subject to financial covenants or coupon step ups.

The debt maturity profile is stated based on contractual repayment obligations including derivative mark to markets and excluding accrued interest.

Debt repayments 2018

 

All bonds, other than the South African DMTN, have been swapped to US$ Libor at or around the time of issuance through the use of interest rate and cross currency swaps with Group relationship banks. These swaps are guaranteed by Anglo American plc and are not subject to any further credit support such as Credit Support Annex or collateral arrangements.

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