* Dividends for 2019 total $1.09 per share
* Water shortages hurt output
* Coronavirus could hurt short term diamond demand- CEO
(Adds detail, quotes, shares)
By Zandi Shabalala
JOHANNESBURG, Feb 20 (Reuters) - Global miner Anglo
American's on Thursday reported a 9% increase in
full-year profits as higher prices for iron ore and precious
metals outweighed weakness in diamonds and coal.
The London-listed miner has led rivals in a recovery from a
2015-16 commodities crash by narrowing its range of businesses,
making its mines more efficient and investing modestly in high
return projects.
Chief Executive Mark Cutifani said: "We have ... benefited
from product and market diversification, with strong precious
metals and iron ore prices offsetting weakness in diamonds and
coal."
Anglo's shares, which gained 25% last year, were up 1.5% by
0841 GMT, outpacing a 0.6% rise in the wider FTSE350 mining
index
Anglo's underlying earnings before interest, tax,
depreciation and amortisation rose to $10 billion in the year to
December from $9.16 billion a year earlier.
The figure was in line with analysts' average estimate of
$9.97 billion, according to Refinitiv IBES data.
Anglo produces platinum, palladium and rhodium which are
used to reduce emissions in automobiles with increasingly
stringent environmental regulations forcing auto makers to use
more of them.
Palladium and rhodium <RHOD-LON> prices have hit
records levels this year as supply has failed to keep pace with
demand.
Platinum is also used to reduce emissions but is preferred
for diesel vehicles, sales of which have fallen in recent years,
leaving prices near ten-year-lows.
Iron ore prices soared following a disaster at a tailings
dam owned by then top iron ore producer Vale SA in
January last year. Dalian Commodity Exchange's front-month iron
ore futures contract gained 28% in 2019.
"The star division was PGMs, reflecting record palladium and
rhodium prices, which could raise 2020 expectations," said
Edward Sterck, analyst at BMO Capital Markets. He said Anglo
remained his firm's top pick among diversified miners.
Anglo declared a final dividend of $0.47 a share, bringing
total dividends for 2019 to $1.09 per share versus $1 paid out
in 2018.
This was in line with Anglo's pledge to pay out 40% of
underlying earnings.
The company did not launch a new share buy-back programme as
it approaches is peak spending on the Quellaveco mine in Peru
next year, finance director Stephen Pierce said.
Cutifani said he expected short term impact from the
coronavirus epidemic in China on its diamond business but no
further material impact as Anglo was less reliant on the
country.
In January, Anglo made a 405 million pound ($523 million)
cash bid to buy a British fertiliser project from Sirius
Minerals.
Sirius shareholder Odey Asset Management said on Wednesday
the terms of Anglo's bid did not represent fair value and it
would only vote in favour of an offer at a higher price.
Cutifani said: "Our offer takes into account future
investment and project needs and consistent with that we believe
our offer is fair and reasonable. He said Anglo would bring
certainty to the project that was not currently there.
(Reporting by Zandi Shabalala; Editing by Edmund Blair/Jan
Harvey/Jane Merriman)
