Shares in Anglo American took a sharp tumble as the multinational diversified miner announced plans to reduce production next year in an effort to save $1 billion. This move comes as the platinum sector continues to be battered by a price rout.
In 2023, the company reported a 3% increase in output compared to the previous year. This growth was driven by expanded operations at the Quellaveco copper project in Peru and strong iron ore production, which offset declines in platinum metals and diamonds. However, for the upcoming year, Anglo American anticipates a 4% decrease in production. This reduction will mainly come from scaling back operations at its Kumba iron ore mines in South Africa and its Los Bronces copper mine in Chile.
The decision to lower production is a response to ongoing market volatility, particularly within the platinum metals market. As one of the world’s largest mining companies by revenue, Anglo American aims to cut costs by an additional $500 million in 2024, on top of the $500 million already targeted.
Platinum prices have suffered a significant decline, with futures down 15% year-to-date. This can be attributed to weak demand from the automotive industry and concerns that demand could further decrease as electric vehicles gain more market share. Platinum, palladium, and rhodium are crucial components used in exhaust systems to reduce pollutants emitted by diesel and petrol engines.
Sibanye-Stillwater, a Johannesburg-based PGM miner, has also taken cost-cutting measures by restructuring its operations in South Africa due to a challenging price environment and persistent inflationary cost pressures. This restructuring could potentially impact up to 4,000 jobs, as announced in October.
Anglo American to Lower Production, Cut Cost by $1 Bln Next Year
Anglo American, one of the largest mining companies globally, has announced plans to halt investments in expanding its Amandelbult platinum-metals mine in South Africa. The decision comes as a response to the platinum-price slump and rising costs, with the South African rand remaining weak throughout the year. As the world’s biggest producer of platinum, the country has been significantly affected.
The company anticipates a 2% decrease in cost per unit by 2024, primarily driven by lower costs in copper and platinum operations. Additionally, capital expenditure is expected to be reduced by $1.8 billion between 2023 and 2026.
Anglo American’s CEO, Duncan Wanblad, emphasized their focus on safety, operational discipline, and capital allocation. He also expressed optimism about the future supply and demand prospects for various metals and minerals.
Another subsidiary of Anglo American, Anglo American Platinum, has released a separate statement outlining its measures to combat cost inflation and the current price rout. These measures include implementing efficiency improvements, intensifying cost-saving initiatives, and revising capital allocation strategies. The company will be hosting calls with media and investors later today to discuss these actions.
As a result of these developments, shares in Anglo American have dropped by 7.3% at 2,063.00 pence as of 1047 GMT.