LONDON (Reuters) - Anglo American's (>> Anglo American plc) chief executive remains confident that he can deliver the company's promised improvement of the business in the next two years despite weak commodity prices.

Shares in Anglo, the smallest of the leading diversified miners, have lagged those of its peers for years, but CEO Mark Cutifani vowed to turn the business around by cutting costs and selling underperforming assets.

The miner is aiming to boost its return on capital employed (ROCE) - a measure of the value a company gets out of its assets - to at least 15 percent by 2016, from 11 percent last year.

On Friday, however, the company said that ROCE had fallen by one percentage point to 10 percent, under pressure from lower prices for some of the products it mines, particularly iron ore, its biggest earner, and from a five-month strike in South Africa that cut its platinum output by 40 percent.

"This was never going to be a linear improvement," Cutifani said. "I am actually more confident today about hitting our target in 2016 than I was 12 months ago, given the underlying operating performance and the potential we see."

Cutifani reiterated that Anglo could divest some underperforming businesses but declined to specify which operations are being considered.

Anglo has already agreed to sell its 50 percent stake in building materials supplier Lafarge Tarmac [LAFPC.UL] for $1.5 billion (882 million pounds) and its platinum subsidiary Anglo American Platinum (>> Anglo American Platinum Ltd) (Amplats) announced this week that it intended to sell six platinum assets in South Africa.

Platinum producer Lonmin (>> Lonmin Plc) said on Friday that it might buy out Amplats from their Pandora platinum joint venture, while South African bullion miner Sibanye Gold (>> Sibanye Gold Ltd) has also said it would consider buying mines from Amplats.

"We had various expressions of interest, from those who have money and those don’t have money," Amplats Chief Executive Chris Griffith said. "If we do (sell) it next year that's a good outcome, and if we don’t do it next year it is a very credible option to list in South Africa."

KEEP OR SELL?

Other assets have also been earmarked for potential sale to support Anglo's long-term debt target of $10-12 billion, compared with $11.5 billion at the end of June.

A final decision on those assets has yet to be made, Cutifani said, though analysts suggested that Anglo may end up selling its nickel assets as well as some underperforming coal, manganese and copper mines.

"Further divestments will be welcome, but investors will now want to see which assets specifically will be up for sale and how quickly these can be achieved," Nomura analysts said in a note.

Part of Anglo's strategy to boost return on capital involves delivery of its $8.8 billion Brazilian iron ore project Minas Rio, which Anglo said is now 95 percent complete and on track for iron exports by the end of the year.

After delays and cost overruns, Minas Rio is now expected to deliver 11-14 million tonnes of iron ore next year and about double that figure in 2016.

Anglo's first-half underlying operating profit fell 10 percent to $2.9 billion, in line with analyst forecasts, while underlying earnings per share (EPS) rose 2 percent to $1, compared with an average analysts' forecast of $0.93.

Lower commodity prices hit underlying profit by $1 billion and the platinum strike cost Anglo a further $385 million.

Among the various divisions, Anglo's diamond subsidiary De Beers, which contributed about a sixth of the group's earnings last year, performed particularly well.

Its ROCE rose to 11 percent from 8 percent last year.

A note from Citi analysts said there were no major negatives for Anglo American, adding: “Anglo reiterated that it is continuing on the path of delivering rationalisation, growth projects and operational efficiency, and there didn’t appear to be anything in the results that suggested otherwise.

"However, in our view, it is still a long road ahead for the company.”

Showing growing control its balance sheet, Anglo reduced its expected capital expenditure for this year to $6.5-7.0 billion from previous guidance of $7.0-7.5 billion.

Anglo shares have gained almost 20 percent this year, outpacing an 11 percent rise in the UK-listed mining sector <.FTNMX1770>, buoyed by investor confidence in Cutifani's revamp strategy.

The shares were up about 3 percent by 1325 GMT (2.25 p.m. BST), outperforming a 0.7 percent rise for the mining sector.

(Editing by David Goodman and Jason Neely)

By Silvia Antonioli