* Share rally stalls as some analysts disappointed
* Major miners have reported increased cash, reduced debt
* Stronger South African rand creates headwind (Adds Moody's statement)
By Barbara Lewis
LONDON, Feb 22 (Reuters) - Anglo American said on Thursday annual earnings rose 45 percent and net debt halved as the miner rebounded from a commodities slump and said it had become a fundamentally different business focused on productivity.
All the major miners have reported a recovery from the 2015-16 crash in commodities prices, announcing increased returns for shareholders and lower debt, while promising to avoid the spending sprees that piled on supplies and helped to end the last boom.
Anglo American and Glencore, which on Wednesday said its results were the strongest yet, saw their shares fall the furthest in the downturn and have rallied the most as commodity markets have recovered.
South African-focused Anglo received a further spur this year from expectations the country's new President Cyril Ramaphosa, who replaced Jacob Zuma, will support the industry.
Anglo shares, which had outperformed rivals by rising more than 15 percent this year, slipped more than 4 percent as analysts said Thursday's results missed some forecasts. In later trade they recovered to close around flat.
Moody's credit rating agency issued a statement saying Anglo American could be on track for an upgrade.
"Positive rating pressure could develop should Anglo sustain the improved levels of profitability and cash flow generation over the next 12 to 18 months, while at the same time continuing to prudently manage investments in growth opportunities," Sven Reinke, senior vice president at Moody’s and lead analyst for Anglo American, said.
The company reported underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $8.8 billion, a 45 percent increase year-on-year.
It delivered free cash flow of $4.9 billion, a 93 percent increase that helped to roughly halve its net debt and it restored dividends that were scrapped during the downturn.
When in the grip of the commodity crash, Anglo said it would narrow its focus to diamonds, platinum group metals and copper. As the market recovered, it ceased to be a forced seller, retaining coal operations that have driven profits higher.
Still it has reduced its assets by 47 percent since 2012 and boosted productivity.
"Anglo American is a fundamentally different business. We are more resilient. We are more competitive. We are delivering solid returns," Chief Executive Officer Mark Cutifani told reporters on a conference call. "Our intention is to keep improving the business from the base we have established today."
In particular, he highlighted the improvement in productivity by 28 percent per person last year alone.
Edward Sterck, analyst at BMO Capital Markets, which rates Anglo outperform, said the full-year profit was slightly light.
"The results are a little disappointing, but the company has demonstrated a significant year-on-year improvement and is clearly still walking down the path to redemption," he wrote.
A stronger South African rand, which reached three-year highs as the president was replaced, has created a headwind by eroding the impact of commodity price gains as the rand-based costs of Anglo's South African operations are effectively higher.
Anglo said it did not hedge the currency, but protected itself through a diverse portfolio and cost cutting.
As miners focus on an expected rise in demand for copper from the renewable energy industry and electric vehicles, Anglo must decide whether to develop the Quellaveco copper project in Peru in which it has an 81.9 percent stake.
Cutifani said the company was finalising feasibility work and the board would be asked to decide around the middle of the year. Anglo was weighing whether its Japanese partner Mitsubishi should have a bigger share to curb costs, he said.
Cutifani said production of diamonds, which provided about a fifth of the firm's revenue, remained central to diversifying the portfolio. The gemstone prices tend to run counter to the overall commodities cycle and are generally less volatile.
The chief executive of Anglo's De Beers diamond unit, Bruce Cleaver, said in an interview De Beers' supply would contract over the coming years, potentially boosting prices.
A new mine at Gahcho Kue in Canada helped lift De Beers' 2017 output to 33.5 million carats, up a fifth from the previous year. It is forecast to rise to 34 million-36 million carats in 2018 before shrinking to 32 million carats in 2019-2020, as old mines in Canada and South Africa become less productive.
Additional reporting by Arathy S Nair and Noor Zainab Hussain in Bengaluru; Editing by Edmund Blair and Jane Merriman