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Anglo American Announces Drastic Reduction in Mining Output


Anglo American, one of the world’s leading mining companies, has unveiled plans to significantly decrease its mining output by 2026. This move is motivated by the need to save a staggering $1.8 billion in costs due to the impact of falling commodity prices on the company’s profits.

As part of these plans, Anglo American will reduce production of diamonds and platinum group metals (PGMs), while also scaling back its copper and iron ore operations in Chile and South Africa. These mines have been hindered by escalating costs and operational challenges.

The announcement sent shockwaves through the market, as shares in Anglo American fell by 5%. In fact, the company’s stock has already experienced a 35% decline over the past year.

While the circumstances that have led to this decision may not be seen as entirely positive, industry analysts believe that the streamlined approach will enable Anglo American to address the more problematic aspects of its business. This proactive measure is expected to ultimately strengthen the company’s position in the years to come.

To achieve its cost-cutting objectives, Anglo American will implement various measures. These include reducing production at its Kumba iron ore mine in South Africa and consolidating operations at its Los Bronces Copper mine in Chile. The latter will involve closing down one of the two facilities at the site, thereby optimizing efficiency.

Over the next two years, Anglo American plans to slash its overall production by 7%, with the largest reduction targeting copper output specifically.

Anglo American’s Production Cuts Amidst Declining Commodity Prices

Anglo American, one of the leading mining firms, has recently announced significant production cuts due to the adverse impact of falling commodity prices on its earnings. Over the course of the past year, the company has witnessed a substantial decline in profits, experiencing a staggering 41% drop from $8.7 billion in the first half of 2022 to $5.1 billion in the first half of 2023.

The decrease in commodity prices has particularly affected Anglo American’s diamonds business, with underlying earnings plummeting by 63%. Similarly, the mining firm’s PGMs division, which encompasses palladium, iridium, and platinum, reported a stark decline of 76% in underlying earnings.

In addition to this challenging market environment, inflation and operational issues have contributed to an increase of 3% in the company’s unit costs during the first half of 2023. Factors such as soaring water prices and facility problems at Anglo American’s Los Bronces mine in Chile have led to a significant cost surge of 42% within its Chilean operations.

Another setback faced by Anglo American is the limitation of its capabilities at Kumba, as South Africa’s state-owned rail company, Transnet, has encountered internal problems. Consequently, this has resulted in unsold stock for the mining firm.

Despite a $2.5 billion bailout granted to Transnet by the South African government on December 1st, Anglo American foresees that it will still require time for conditions to improve.

Nonetheless, the mining giant remains determined to combat these challenges. The company had already made plans in October to streamline its operations and reduce costs by an impressive $500 million. As part of these efforts, hundreds of jobs in its London and Johannesburg headquarters have been slated for elimination. Anglo American proudly declares that these cost-cutting endeavors are “well advanced” and are expected to be fully completed by mid-2024.

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