Anglo's Austrian paper purchase nearly in the bag
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Company ups stake in AngloGold to 54,4%
Resources Correspondent
ANGLO American is planning to buy the 30% it does not already own in Austrian paper company Frantschach as it moves to consolidate its paper and packaging business in Europe.
The company, which reported net earnings for the year to the end of December 2003 up 2% at $1,59bn, said it hoped a deal would be finalised soon.
Frantschach produces paper sacks. A few years ago Anglo increased its stake in the company to 70%.
Anglo's paper and packaging division contributed $368m to the company's headline earnings in financial year 2003, down 2% on the previous year as the company's South African paper and packaging business Mondi SA reported a drop in operating profit of 14%.
This was due to the stronger rand, which increased pressure on the domestic prices and lower export margins.
In Europe, though, the paper and packaging division, which was the strongest performer of Anglo's eight divisions last year, recorded operating profit up 9% at $471m.
Frantschach records sales of nearly à 2bn a year and CEO Tony Trahar said the acquisition of the additional stake would be a boost because of the access to the additional earnings.
Speculation that Anglo American may be looking to sell its stake in Highveld Steel & Vanadium and its 52,9% holding in Tongaat-Hulett persists.
Yesterday, Trahar said that Highveld Steel & Vanadium was a core business for Anglo and that he would like to see Tongaat-Hulett making a profit again.
Tongaat-Hulett posted a net loss of R41m in financial 2003.
Anglo said yesterday that it had increased its stake in AngloGold to 54,5%. An additional 3,1% was added to the company's holding in AngloGold in the year.
Trahar said that as well as seeing value in the company, the share buying was carried out in expectation that its stake in AngloGold would be diluted with the completion of the miner's merger with Ashanti Goldfields.
Anglo said yesterday that it was too early to comment on whether it may have to reduce its stake in SA's largest iron ore miner, Kumba Resources, from the 66,6% it holds.
Last year Anglo said that it had an agreement with government to cap any stake in Kumba at 49%, but yesterday Trahar said he thought a "number of things had changed since then".
Trahar highlighted that it was apparent that there was a need for significant black economic empowerment involvement in Kumba and said that Anglo American was in discussions with various parties about this.
"Government is aware of our discussions," said Trahar.
Trahar said that the Competition Tribunal hearing into Anglo's plans to take a controlling stake in Kumba had delayed possible expansion projects, but he said that demand for iron ore was still strong.
If the possible growth projects available to Kumba were pursued, the company's iron ore production could rise from 30-million tons a year to 75-million tons by 2009.
Anglo American has consistently grown through acquisition but yesterday Trahar said assets were "beginning to look a bit expensive".
Feb 26 2004 07:52:05:000AM Julie Bain Business Day 1st Edition
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