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22/02/2024
Mining News

Mining Giant Anglo American to Cut Copper and Iron Ore Production

Anglo American plans to reduce iron ore and copper output in the near term to lower costs, one of the world’s top mining companies said on Friday as it fights to boost its share price that has slumped by over 30% this year.

After the production, capex, and costs guidance on Friday, shares of Anglo American – which produces copper, nickel, platinum group metals, and diamonds, among others – slumped by 6.5% on the London Stock Exchange in the early morning.

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Year to date, Anglo American’s stock has lost 36%, compared to an 11% share price increase for Rio Tinto and a 5% rise in BHP’s share price so far this year.

The markets for some of Anglo American’s core mining products have been in a surplus due to subdued demand in China and an overall economic slowdown. Issues with critical infrastructure in South Africa have also affected Anglo American’s iron ore operations there.

“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,” Anglo American CEO Duncan Wanblad said in a statement.

The company plans to reduce its capital expenditure by $1.8 billion between 2023 and 2026 period.

“Operationally, we are improving cost performance and cash generation by reconfiguring a number of our assets to adjust the production profile to near term constraints and market conditions, and thereby also protect longer term value,” Wanblad said.

The production cuts will include lower output in the Kumba iron ore site in South Africa “in line with prolonged logistics constraints,” as well as moving to one plant at the Los Bronces copper operation in Chile.

Anglo American expects its total production to decline by 4% next year and unit costs to drop by around 2%. Production is expected to further drop by another 3% in 2025, before rising by about 4% in 2026.

 

Source: Oil Price

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