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Miners tumble as Anglo American scraps dividend

Shares in mining companies dive as Anglo American scraps its dividend and fears over China's slowing growth reignite.

 
Miners tumble as Anglo American scraps dividend

Miners have tumbled to the bottom of the FTSE 100 after Anglo American (AAL) suspended its dividend through to the end of 2016 and fresh China data reignited fears over slowing growth of the world's top metals consumer.

Anglo American fell to the bottom of the index, down 8.6% at 337.3p, reaching a new all-time low. It was joined by Glencore (GLEN), down 9% at 77.7p, and the rest of the FTSE 100's mining contingent, which dragged the blue-chip index 69 points, or 1.1%, lower to 6,168.

Other fallers included:

  • Rio Tinto (RIO) -5.6% at £19.50;
  • BHP Billiton (BLT) -5.7% at 721.9p;
  • Antofagasta (ANTO) -5% at 454.2p;
  • Randgold Resources (RRS) -2.8% at £41.00;
  • Fresnillo (FRES) -2.6% at 672.5p.

Anglo American, which for the last three years has paid out dividends of 85 cents per share, composed of a 32 cents interim payment and a 53 cents final, has scrapped this year's final dividend. Interim and final dividends for next year have also been cancelled. The miner had been yielding 8.5%, an indication the market viewed the pay-out as unsustainable. 

The miner is also slashing its workforce by two-thirds as it grapples to deal with the commodities rout that has seen its shares plunge 72% this year.

'While we have continued to deliver our business restructuring and performance objectives across the board, the severity of commodity price deterioration requires bolder action,' said chief executive Mark Cutifani.

Russ Mould, investment director at AJ Bell, said the move had not come as a surprise, adding peers Rio Tinto and BHP Billiton still looked vulnerable to a cut. Glencore scrapped its dividend payments earlier this year.

'A plunge in the Bloomberg Commodity index to a 16-year low helps to explain Anglo American's decision today to cancel any dividend payments in 2016, a move which in turn piles the pressure on BHP Billiton and Rio Tinto to reassess their shareholder payouts,' he said.

'Analyst forecasts suggest BHP Billiton will offer a yield of more than 10% for 2016 and Rio Tinto more than 7%. Both look to be at risk in the current commodity price environment, especially as BHP's forecast 2016 profits provide dividend cover of just 0.4 times and Rio's one times.'

Miners were also suffering under the weight of data showing that China's imports fell for the 13th consecutive month with an 8.7% fall in November compared to a year earlier.

Only a handful of stocks made gains as a broad-based sell-off took hold. They included airlines benefiting from the low oil price, which remained at subdued levels, trading at $41.08 a barrel, following yesterday's dramatic falls.

British Airways owner International Airlines Group (ICAG) was up 0.7% at 591p while EasyJet (EZJ) rose 0.7% to £17.17.

Supermarkets also rose following a series of broker upgrades. Sainsbury's (SBRY) was up 1.1% at 244.4p, Morrisons (MRW) added 0.9% to 147p and Tesco (TSCO) traded 0.7% higher at 158.2p.

1 comment so far. Why not have your say?

CUEBALL

Dec 08, 2015 at 17:28

Have the FTSE trackers finally hit bottom?

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