- Anglo American plans to reduce output at its Kumba iron ore operations
- The London-listed mining giant is the world’s largest platinum producer
- Shares in the group were the biggest FTSE 100 faller on Friday morning
Anglo American intends to scale back mineral production in order to lower costs and boost cash generation following a challenging year.
The London-listed mining giant and world’s largest platinum producer said it would reduce output at its Kumba iron ore operations in South Africa, and use only one plant at the Los Bronces copper mine in Chile.
At the former facility, the firm’s production remains heavily disrupted by industrial action involving workers employed by rail and port company Transnet.
Cutback: Anglo American said it would reduce output at its Kumba iron ore operations
Problems have been exacerbated by cable thefts, train derailments and even locust swarms, resulting in greater stockpiling of iron ore at the mines.
Anglo American said shrinking output at Kumba would help it concentrate on higher-margin production at its platinum group metals business.
Copper output a the firm’s Chilean operations was hit earlier this year by a substation fire, interrupting the Los Blonces mine’s power supply for over a fortnight.
It expects the planned cutbacks will lead to lower unit costs next year and reduce capital expenditure by $1.8billion over the 2023 to 2026 period.
Duncan Wanblad, chief executive of Anglo American, said: ‘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 shares plunged 7.8 per cent by midday, making them the biggest faller on the FTSE 100 Index.
Shares in the company have slumped by more than a third this year because of sliding commodity prices and rising inflation, which has sent revenues and profits tumbling.
Anglo American’s underlying earnings before nasties totalled $5.1billion in the first half of 2023, compared to $8.7billion in the same period last year, while sales contracted by $2.4billion to $15.7billion.
Since reporting those results, the group has lowered copper production guidance and warned of corporate office job cuts across several countries.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: ‘Miners are at the mercy of cyclical material costs, and the wheel has been turning against new CEO Duncan Wanblad – with issues compounded by operational headaches too.
‘Anglo’s overall position continues to be strengthened by its exposure to consumer products, meaning it’s partially protected from the worst of industrial slumps, but there is clearly work to be done to keep the ship in good order over the next twelve months.