Anglo American plans cost cuts as shares tumble 5%

Anglo American (LSE: AAL) shares dropped 5.5% on Friday morning after the global mining company said it remains focused on cost controls and plans to trim capital expenditure over the medium term to cope with “elevated macro volatility”.

The mining giant indicated that it has already reduced its business support costs by $500 million by mid-2024. It expects an additional $500 million in annual cost savings identified across its global businesses in 2024.

Anglo America’s cost-reduction efforts come as the company faces ongoing economic and geopolitical volatility and cyclical weakness in platinum group metals and diamonds.

“In the near term, given continuing elevated macro volatility, we are being deliberate in reducing our costs and prioritising our capital to drive more profitable production on a sustainable basis,” said Anglo American Chief Executive Officer Duncan Wanblad.

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Wanblad said Anglo’s iron ore business Kumba had slashed production forecasts over the next four years in line with prolonged logistics constraints in South Africa.

Anglo American expects to deliver lower unit costs in 2024, despite high inflation, and $1.8 billion lower capital expenditure over 2023-2026.

Anglo American shares have dropped 36% year-to-date.