Anglo slashes capital budget

Johannesburg - Anglo American (Anglo) will slash its 2009 capital expenditure budget by more than 50% to $4.5bn, but the group will not specify the implications for its employees at this stage.

Anglo spokesperson Pranill Ramchander said: "We cannot predict the likely impact on our work force as yet.

"We will continue to work closely with governments and unions to minimise the impact of these changes on our businesses, and we will provide an update once we have completed various internal processes.

"Anglo will act in a responsible way to minimise the impact on the workforce."

Ramchander dismissed as "speculation at this point" an article published in early December by UK newspaper the Sunday Telegraph, which reported thousands of jobs would be lost as a result of the cutbacks.

The article also stated Anglo's head office and regional office structures were under review.

The Anglo statement said: "The revised expenditure plans across Anglo American's businesses will ensure that the group's capital spending is prioritised towards those businesses and development projects that are expected to perform most strongly in the near term, while not having a material detrimental effect on those projects that are already at an advanced stage of development."

According to CEO Cynthia Carroll, "the substantial changes to planned capital expenditure will be achieved principally by rescheduling many of the group's development projects. The group's capital expenditure programmes for 2010 will continue to be monitored against prevailing and forecast market conditions".

The main impact of the cuts is on Anglo's copper and coking coal operations, as well as the planned Minas-Rio iron ore project in Brazil.

In the group's base metal division the commissioning of the expansion project at the Los Bronces copper mine in Chile will be delayed by eight months, with the first production now expected in the fourth quarter of 2011.

Iron ore projects

There will also be a 12-month commissioning delay to the Barro Alto nickel mine in Brazil, with first nickel production now scheduled for the first quarter of 2011.

Despite this, Anglo expects its 2009 base metal production to be maintained at similar levels to 2008 with the exception of copper which should be 5% higher because of the de-congesting project under way at the Collahausi mine.

The Minas-Rio iron project in Brazil will be delayed by six to 12 months, with first iron ore production now expected in late 2011 or early 2012.

Kumba Iron Ore is largely unaffected with 2009 production expected to be 10% higher than 2008, while first production at the Sishen South project is still scheduled for the first half of 2012 although planned capex during 2009 "has been optimised along the critical path".

At Anglo Coal, plans to boost metallurgical coal production during 2009 have been curtailed and production is expected to be marginally below 2008 levels.

According to the Anglo statement, the "sentiment from many of the world's end users of steel products remains negative. Should conditions change materially, Anglo American will respond with further adjustments to its metallurgical coal production.

"Anglo American's total 2009 coal production is also expected to be marginally below 2008 levels".

Anglo Platinum intended producing 2.4m ounces of refined platinum in 2009, which will peg output at 2008 levels. Anglo Platinum will also drop its 2009 capital expenditure to $900m.

The Anglo statement said: "Anglo Platinum will continue to monitor its production levels against global economic developments, and will provide further updates on its production plans at appropriate intervals."

- Miningmx.com

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