Performance 2009
2009: a year of contrasts
In 2009, there was a 50% reduction in the global investments of the Anglo American Group. Business challenges were significant in Brazil, which stimulated the adoption of savings enhancing initiatives, such as the Asset and Supply Chain Optimization Programs.
The phosphate market, and consequently the fertilizer business, were severely impacted at the beginning of the downturn, with sharp decreases in raw material prices and increases in inventory, combined with record production, resulting in a loss for the year in this business. Copebrás recorded an operational loss of US$ 40 million, mainly due to the drop in fertilizer prices, which was partially compensated by a 30% increase in sales volume, totaling 1.06 million tons as a result of good climatic conditions in the second semester of 2009 and low fertilizer prices. The forecast for this sector in 2010 indicates there will be a recovery in prices and sales.
The crisis had a negative impact on Anglo American’s financial results, leading to a drop in profits of approximately 80% or R$ 200 million. Despite this drop, the Asset Optimization Program (AO) generated savings of US$ 140 million (or R$ 247.8 million, using the exchange rate of R$ 1.77 from April 2010) due to improvements implemented in operational sectors, such as the electromechanical installation program at the Barro Alto Project and the Tailings Project – that recovers niobium from phosphate tailings and was implemented in the phosphate and ferroniobium operations in Catalão. Savings were also recorded in the purchasing area due to the Supply Chain Program, especially with the construction of the new plant in Barro Alto. Savings reached approximately US$ 51 million in the nickel business, while in the niobium and phosphate businesses they totaled US$ 88 million.
Notwithstanding the difficulties, a historic record for superphosphate production was recorded in August, and the targets for the nickel market were reached. At the height of the financial crisis, nickel was negotiated for as low as US$ 9,700 a ton (the average price in 2009 was approximately US$ 14,600 a ton). Damage to an oven in Venezuela reduced that country’s production and stimulated Brazilian nickel sales, which allowed for production to be sold as forecasted. By year-end 2009 the value of the metal had already reached US$ 18,000 a ton. Nickel production in 2009 was 5% higher than 2008 due to partial remodeling at the beginning of the year, so that maintenance in one oven could be postponed and Codemin production of nickel could exceed 9 thousand tons. Despite the lower operating results, there was a 32% increase in nickel sales, especially in the second half of 2009, due to the increase in Chinese stainless steel production and imports.
For niobium sales, the 2009 crisis continued to impact traditional markets such as the U.S. and Europe, a trend already observed in 2008. Although the demand for niobium underwent a sharp drop during the year, there was an increase in consumption by emerging markets, especially the automotive and infrastructure sectors, which contributed to a rise in sales to countries such as Russia, India and China. This increase was due to Anglo American’s strategy of expanding its client and market base. Mineração Catalão generated an operational profit of US$ 106 million, 36% higher than 2008, with a sales volume of 5,200 tons of niobium – representing a 12% rise resulting from the increase in production from the Tailings Project.
