Anglo takes axe to spending, new projects

The United Kingdom-based company said it intends to reduce its 2009 capex to $US4.5 billion ($A6.4 billion). Thus capex includes $1.3 billion of stay-in-business spending, lower than 2008 levels, the company said today when announcing its business-wide spending review.The massive scale-back in capex will be achieved by rescheduling the company’s development projects for 2009. No new projects will go ahead unless these development projects are at an advanced stage and expected to perform strongly in the near term. “We have taken decisive action as a result of the fast changing economic climate,” Anglo chief executive Cynthia Carroll said in a statement. In coal, Anglo said it was anticipating further reduced demand from steelmakers and it had curtailed plans to grow its metallurgical coal production rates by 10%. The miner also warned should steel demand fall further, it would respond with “further adjustments” to its metallurgical coal production rates. Total coal production will be below 2008 levels, and capital expenditure on coal will be reduced to just $400 million.In the other key steelmaking area, iron ore, Anglo American continues to ramp up production at the Kumba iron ore operation, however, spending on capital has been cut to $900 million.The Minas-Rio project in Brazil will now be held off for 6-12 months, with first iron ore due in late 2011. The miner will maintain base metal production at 2008 levels, except in copper, which will be 5% higher after de-bottlenecking at Collahuasi. However, expansion at the Los Bronces copper mine in Chile will be delayed for eight months, and at the Barra Alto nickel mine in Brazil for a year.In platinum – where Anglo is the world’s largest producer – demand has suffered “materially” as car sales plunge in developed countries.The company intends to produce 2.4 million ounces of refined platinum in 2009.Capex for the precious metal has been dropped to $900 million.Despite all the doom and gloom, the company said it still believed the medium to long-term outlook was positive for its core commodities. However, the miner also said its 2010 spending was under review. The miner also pointed out its debt loading was a manageable $11 billion, giving a gearing level of around 30% – one of its largest competitors, Rio Tinto, has been punished by equity markets in Europe and Australia, and spurned by one-time suitor BHP Billiton, for its massive debt position.

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