Anglo American plans $1.8bn spending cuts by 2026
Global miner to reduce production at Kumba Iron Ore due to rail bottlenecks
Global miner Anglo American aims to cut capital expenditure by $1.8bn (R34.02bn) by 2026, it said on Friday, as it grapples with a fall in demand for most of the metals it mines and a huge writedown for its British fertiliser project.
Anglo's share price opened 4.2% lower, making the global miner the biggest loser on the FTSE 100.
The London-listed miner, which had already targeted saving $500m (R9.43bn) by cutting corporate jobs and costs, including at head offices in Johannesburg and London, aims to cut an additional $500m (R9.45bn) by 2024.
“In the near term, given continuing elevated macro volatility, we are being deliberate in reducing our costs and prioritising our capital to drive more profitable production on a sustainable basis,” CEO Duncan Wanblad said.
Global economic weakness has lowered the demand outlook for some metals.
Peers Antofagasta and Glencore, for example, cut production guidance for copper and nickel respectively this year.
Anglo American said on Friday it will reduce production at its South African unit Kumba Iron Ore, where stockpiles had grown to 9-million metric tonnes by September because of worsening rail bottlenecks.
Its cost-cutting measures also include focusing on higher-margin production for its platinum group metals operations in South Africa and putting two processing plants at its Los Bronces copper mine in Chile on care and maintenance.
Overall production across the resources it mines will be reduced by 4% in 2024, taking unit costs down by 2%, it said.
Capital expenditure in 2024 will be about $5.7bn (R107.72bn), $800m (R15.12bn) lower than previously expected.
“This is likely to result in a stronger operational position with a better balance sheet/cash flow position than previously,” RBC Capital Markets analyst Tyler Broda said.
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