Anglo American is set to cut its annual run rate costs by $1 billion and capital spend by $1.6 billion over the next three years, while also cutting out unprofitable volumes.
This follows high inflation on the group’s costs, coupled with a cyclical downturn in PGMs and diamonds. “We are systematically reviewing our assets and will take further actions as needed to ensure their competitiveness,” said Anglo chief executive Duncan Wanblad.
“We have also … set out the difficult but necessary reconfigurations of our PGMs and Kumba operations to set them up on a far more sustainable footing, building on the recent 25% cost reduction from our consolidation of senior head office roles.”
He said its underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) of $10.0 billion at a 39% mining EBITDA margin shows a 13% lower product basket price and a 4%-unit cost increase, partially offset by their 2% volume growth.
Anglo’s net debt rose to $10.6 billion due to the growth in investments the group had been making through the cycle in line with its belief in strong long-term fundamentals.
“Our updated assessment of global GDP growth and consumer demand were the main factors behind the $1.6 billion write-down of our book value of De Beers, principally relating to goodwill,” said Wanblad.
“There is no doubt that while the immediate macro picture presents some challenges for our PGMs and diamonds businesses, the demand trends for metals and minerals have rarely looked better.”
Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished
