Anglo-American (AAL.L): One foot out of Venezuela’s door

Continuing with Venezuela day: Anglo American Plc is the biggest foreign mining investor in Venezuela. Or it was, hard to say now that it has sold its stake in the country’s biggest coal mine. This per Bloomberg, but as increasingly common with their boneheaded Web strategy, I have no link to offer you. Instead, I recommend you check out the Peabody Energy annual report — which, oddly, is available at the Bloomberg website.

Paso Diablo Mine. We own a 48.37% interest in Carbones del Guasare S.A., which operates the Paso Diablo Mine, a surface operation in northwestern Venezuela that produces thermal coal for export primarily to the U.S. and Europe. We began 2010 with a 25.5% ownership interest in the joint venture. During 2010, we acquired Anglo American plc’s 25.5% ownership interest in the joint venture and transferred 2% of our ownership interest to Carbones del Zulia S.A. as part of the acquisition.

In other words, Anglo out, government takes majority stake, Peabody Energy’s minority stake grows.

This leaves Anglo only with Loma de Niquel, the country’s only nickel mine. It has some permits coming due in 2012. This asset sale might leave a reader wondering about Anglo’s Venezuela strategy.

On the other hand, getting out of the coal mine may have just be prudent risk management. Look at what Peabody has to say about the business:

In 2009, the Company recognized an impairment loss of $34.7 million related to its interest in Carbones del Guasare based on the joint venture’s deteriorating operating results (resulting in 2009 equity losses of $19.9 million), ongoing cash flow issues resulting in no dividend payments since January 2008, the Company’s expectations concerning ongoing operating and cash flow issues for the joint venture and uncertainty impacting recoverability of this investment.

Ouch.

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One thought on “Anglo-American (AAL.L): One foot out of Venezuela’s door

  1. lgg

    I always thought that the one willing to get out of Guasare was Peabody and not Anglo American. Hmmm.

    And if Anglo American wants to get rid of Loma de Niquel, the government should be more than willing to buy, considering that they already took over the 10% that used to be owned by Banco Federal’s Mezerhane

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