The Investment Column: Anglo American

ANGLO AMERICAN, the South African mining giant, says it's looking to spend up to $6bn (pounds 3.75bn) on acquisitions. In that respect it's starting to sound like the FTSE 100 company it became when it took a primary listing in London in May. But while good deals tend to shift shares, City caution persists.

Anglo's acquisition budget is not that ambitious. With just pounds 700m in debt, the pounds 14bn company is practically ungeared. Upping borrowings is not just about tightening the balance sheet, however. Anglo's attraction to investors whose existing mining share is Rio Tinto, or Billiton, is the different nature of its metals portfolio. That's biased towards precious metals used for jewellery and as a value-store.

The outlook here is patchy. Gold, representing a quarter of net income, dominates. Its profits fell $32m to $239m in the half-year, as fluctuations in the South African exchange rate offset a painful $103m hit from the tumbling gold price. Platinum profits rose slightly to $207m after a hit from falling platinum prices was similarly counterbalanced. De Beers' diamond activities remain troubled by lacklustre Asian economies. The outlook for metals prices, both precious or base, is anyone's guess. But by being less exposed than its peers to base metals, Anglo is less exposed to the industrial upswings expected as economic recovery continues around the globe. Meanwhile, many in the City say the information Anglo provides is both insufficient and unnecessarily complicated.

Analysts expect post-tax profits of $1160m and earnings of $2.96 per share this year. Unless Anglo's acquisition hunt significantly restructures the portfolio, the shares, down 47p at 3460p yesterday, look unlikely to strengthen near-term.