SINGAPORE Anglo American Plc could slash spending on new mines by half as chief executive officer Mark Cutifani slammed the companys underperformance and stressed the need for better cost control.
The London-based miner posted underlying earnings of $1.3 billion for the first half, down 28 percent from the same period last year, due mainly to lower commodity prices and increased unit costs. It was the companys first financial report since Cutifani took over in April from previous chief executive officer Cynthia Carroll.
Anglo has slashed its 2013 capital expenditures by $1 billion and pledged wider changes to its $17-billion project pipeline. "An in-depth review of all of our 95 operations and projects is well under way and will be completed over the next three months," Cutifani said in a statement, adding that there was a need for greater discipline for the organization.
Only 11 percent of Anglos operations consistently meet targets, the company said.
On the capital structure, the company said its objective is to maintain a strong investment-grade rating. It will have limited flexibility over the next two years, however, due to heavier capital expenditure commitments for the development of Minas-Rio in Brazil and Grosvenor in Australia.
Ongoing market concerns arising from uncertainties over the near-term outlook for the global economy may lead to short-term volatility in the copper price, Anglo said, but medium- to long-term fundamentals for copper remain strong, predominantly driven by robust demand from emerging economies, ageing mines with declining grades and a lack of new supply.
The miner also highlighted Chinas focus on rebalancing its economy away from investment toward domestic consumption, and said that the country will see lower economic growth rates in the future.
A version of this article was first published by AMM sister publication Metal Bulletin.