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Miner Anglo American reveals production cuts to combat cost rises

Anglo American has revealed production cuts to bring costs down (Anglo American/PA)
Anglo American has revealed production cuts to bring costs down (Anglo American/PA)

Mining giant Anglo American has revealed plans to significantly cut production at a number of mines in a bid to slash costs.

Shares in the FTSE 100 company slumped in early trading after it announced the move, which is set to result in a 4% drop in production next year.

Anglo American said it took action earlier in the year to reduce costs “in the face of ongoing economic and geopolitical volatility and the current cyclical weakness in PGMs (platinum group metals) and diamonds”.

The firm has said it will now go further in the face of continued inflationary pressure, as it shares price has dropped by around 30% over the past year.

The latest cuts will lower its capital expenditure by 1.8 billion US dollars (£1.5 billion) between the current year and 2026.

It will reduce production at its Kumba iron ore operations in South Africa and will go down to one operational plant at its Los Bronces copper mine in Chile.

Duncan Wanblad, chief executive of Anglo American, said: “The prospects for mined products have rarely looked better.

“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.

“We are focused on what we can control – safety, operational discipline and capital allocation.

“We are confident in our actions to sustain the competitiveness of our world-class assets and deliver on our outstanding growth opportunities in the metals and minerals that are so critical now and for generations to come.”

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: “Anglo’s overall position continues to be strengthened by its exposure to consumer products, meaning it’s partially protected from the worst of industrial slumps, but there is clearly work to be done to keep the ship in good order over the next 12 months.”

Shares were 5.6% lower at 2,100p on Friday morning.