Anglo American write down as expected

Anglo American was once the titan of the South African business landscape. As was Barloworld for that matter. Not that they are not now, but the simple truth is that they are no longer the giants that people remembered them for. Yesterday there was an announcement from Anglo American that most people expected: Anglo American confirms Minas-Rio capex and records $4 billion impairment. 4 billion Dollars after tax. Wow. We were expecting to see iron ore shipped in this half right now, that was supposed to be now. Soon. Those expectations have been dashed. Well, they were already, 13 November we already saw an update from the company, we wrote about it back then: Anglo American updates on their iron ore business.


I saw red when I read this quote from Cynthia Carroll: "We are clearly disappointed that the diversity of challenges that our Minas-Rio project has faced has contributed to a significant increase in capital expenditure, leading to the impairment we have recorded. Despite the difficulties, we continue to be confident of the medium and long term attractiveness and strategic positioning of Minas-Rio and we remain committed to the project."


I can imagine (and this sounds incredibly harsh) that there will be a Mr. T sucker fools celebration come 1 April at Anglo, as the very last month of Ms. Carroll's tenure at the helm comes to an end. A bad chapter in the Anglo American history. That said however, hindsight is a much better science than predicting. It really is. It would have been better to allocate those same resources to what is clearly a much better iron ore business here in South Africa. But the temptation and steer to diversify geographically was too much to ignore. The only person that benefitted (and big time) was Eike Fuhrken Batista. Sadly I read the first line there and I could not help but think that he, Batista was in the right place at the right time: "Eike Batista is one of seven children of businessman Eliezer Batista da Silva, who was Minister of Mines and Energy." Coincidence? Not on your nelly (Nellie?). But hey, most people who got rich quickly or even slowly knew someone or something. I say most.