Anglo American intends to cut spending by $1.8bn as lower demand continues

Anglo American, a global mining company, stated on Friday that it plans to reduce capital expenditure by $1.8 billion by 2026 as it struggles with a decline in demand for the majority of the metals it mines and a write-down for its British fertiliser project.

Anglo experienced a decline in profits and returns during the first half of the year, following peers Rio Tinto, Teck Resources, and Glencore, as commodity prices were negatively impacted by the weak economy.

By 2024, the London-listed miner hopes to have saved an additional $500 million from corporate jobs and other costs, including head offices in Johannesburg and London. It had previously set a $500 million savings goal.

Anglo was planning significant cost reductions, according to sources knowledgeable on the situation who spoke with Reuters on Thursday.

A weakening of the world economy has reduced the outlook for some metals' demand.

In response to worsening rail bottlenecks, Anglo American announced on Friday that it would be reducing production at its Kumba Iron Ore unit in South Africa. By September, stockpiles there had reached 9 million metric tonnes.

Its cost-cutting strategies also involve putting one processing plant at its Los Bronces copper mine in Chile on care and maintenance and concentrating on higher-margin production for its platinum group metals operations in South Africa.

11 analysts predict that Anglo's core profit will drop to $10.2 billion in 2023 from $14.5 billion in the previous year.

According to the statement, Anglo will cut overall production across all of its resources by 4% in 2024, resulting in a 2% decrease in unit costs.

2024 capital expenditures are projected to be approximately $5.7 billion, which is $800 million less than anticipated.

Additionally, Anglo announced a $1.7 billion write-down in February for the $9 billion Woodsmith fertiliser project, which it is developing in Britain.

(Sources: investing.com, reuters.com)