Anglo to face investors with wary eye on BHP's potential return

LONDON (Reuters) - Anglo American investors will keenly scrutinize CEO Duncan Wanblad on Thursday as he gives an update on the London-based miner's strategy, just months after fighting off a $49 billion takeover bid from bigger rival BHP Group.

Delivering first-half earnings results for the first time after rebuffing the world's No. 1 miner, Wanblad and his team need to convince investors that the strategy to refocus on copper, iron ore and a fertilizer project is on track.

While Wanblad pinned his approach on getting an early start with selling Anglo's coking coal assets in Australia, which the company said has drawn huge interest, an unexpected and unwieldy fire at its Grosvenor mine could torpedo the well-laid plans, setting the timing back with a possible hit to the deal's valuation.

"Clearly, any updates on the simplification strategy will be closely watched," said Richard Hatch, analyst at Berenberg.

"Our key questions center around the challenges of selling the coal business ... and whether Anglo would accept payments in contingent form due to operational issues," Hatch added.

Anglo has already cut its output forecast for steelmaking coal, because of the June 29 fire at its Grosvenor mine that has rendered the affected sections inaccessible. Damage assessment and re-opening is going to take several months, Anglo said.

Investors also expect Anglo to write off the value of its Woodsmith fertiliser project in northern England, having earlier said it would slow down development but still invest $800 million this year. Anglo already wrote down $1.7 billion on the project a year ago.

The miner last week said it's also exploring options for further reductions in diamond production at its De Beers unit amid lower prices, to help preserve cash.

The restructuring plan, which also includes the demerger of its South African platinum unit, closure or sale of its nickel mines and the divestment of diamonds business De Beers, could be completed by 2025.

Unless, BHP resumes its pursuit or other suitors, join the hunt.

"BHP could come back after six months, or could wait for the Amplats unbundling to be complete," said Ian Woodley, portfolio manager at Old Mutual.

"If I were them, I would wait at least until the unbundling has moved along a bit further," he added.

The main prize in Anglo's portfolio are its world class and long-life copper assets in Latin America.

Copper is seen as a draw-card to deals in the mining sector, with investors expected to demand that even the most profitable companies show plans on how to grow the metal's portfolio.

"Having an exposure to the copper sector, to the copper price, is attractive for investors," said Erik Belz, president and chief operating officer at hedge fund Engine No. 1.

"Consolidation can get our (investors) costs down. If we get our costs down, we can expand our margin. And if the price goes up on top of that, then that's sort of two ways to win," Belz added.

(Reporting by Clara Denina and Felix Njini; Editing by Veronica Brown and David Evans)