| Wed 17 Dec 2008, 9:30 | | AGL - Anglo American reduces 2009 capital expenditure by more than 50% to |
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AGL
ANAAL
AGL - Anglo American reduces 2009 capital expenditure by more than 50% to
$4.5 billion
News Release
Anglo American plc
Incorporated in the United Kingdom
(Registration number: 3564138)
Short name: Anglo
Share code: AGL
ISIN number: GB00B1XZS820
("Anglo American plc" or "the company")
Anglo American plc
20 Carlton House Terrace London SW1Y 5AN United Kingdom
Tel: +44 (0)20 7968 8888 Fax: +44 (0)20 7968 8500
www.angloamerican.co.uk
Registered office as above.
Incorporated in England and Wales under the
Companies Act 1985. Registered Number 3564138
17 December 2008
Anglo American reduces 2009 capital expenditure by more than 50% to $4.5 billion
Anglo American plc has completed a wide ranging review of its capital
expenditure programme in recent weeks, at a time when the mining industry
has experienced an unprecedented period of rapid declines in commodity
prices due to global economic uncertainty. Such circumstances present a
very different near term outlook and a clear need to adjust the Group`s
investment plans.
Planned expansionary and stay-in-business capital expenditure for 2009 will
be reduced to reflect the changed outlook. The revised expenditure plans
across Anglo American`s businesses will ensure that the Group`s capital
spending is prioritised towards those businesses and development projects
that are expected to perform most strongly in the near term, whilst not
having a material detrimental effect on those projects that are already at
an advanced stage of development.
Capital expenditure for 2009 has been capped at $4.5 billion, a reduction
of more than 50%, including $1.3 billion of stay-in-business capital
expenditure, a lower level than the projected amount for 2008. The
substantial changes to planned capital expenditure will be achieved
principally by rescheduling many of the Group`s development projects;
revised capital expenditure levels, their impact and guidance on 2009
production are set out below. The Group`s capital expenditure programmes
for 2010 will continue to be monitored against prevailing and forecast
market conditions.
Cynthia Carroll, Chief Executive of Anglo American, said:
"We have taken decisive action as a result of the fast changing economic
climate and have undertaken a thorough re-evaluation of our stay-in-
business and development requirements. We have made significant
adjustments to prioritise the expenditure in those areas where we expect
relative outperformance in the near term while maintaining a high degree of
flexibility for our future growth. Beyond these changes, we are making
excellent progress with our asset optimisation programme and procurement
and shared service initiatives, driving significant cost and efficiency
improvements across the Group. With our robust balance sheet and high
quality asset portfolio, Anglo American is well positioned to weather the
current weak economic conditions and to continue to prosper for the benefit
of all our stakeholders."
Platinum
Near term platinum group metal (PGM) demand has been impacted materially by
the global economic slowdown. Amongst other things, vehicle sales in North
America, Europe and Japan have slowed considerably, having a negative
effect on forecast consumption of PGMs for autocatalysis. Anglo Platinum,
as the world`s largest platinum producer, intends to respond on an ongoing
basis to the challenges that face the platinum industry. Anglo Platinum
plans to produce 2.4 million ounces of refined platinum in 2009. Anglo
Platinum will continue to monitor its production levels against global
economic developments and will provide further updates on its production
plans at appropriate intervals.
Total capital expenditure for 2009 has been reduced to $900 million, including
$600 million on projects, through deferral of expenditure across several major
projects, including Amandelbult No.4 Shaft, Twickenham, Styldrift and the
second slag cleaning furnace at Waterval.
Base Metals
Anglo American expects 2009 production of its base metals to be maintained
at similar levels to 2008 with the exception of copper production, which is
expected to be approximately 5% higher than 2008 due to the benefit of the
debottlenecking project undertaken at the Collahuasi mine.
Base Metals` project capital expenditure for 2009 has been reduced to $1.3
billion.
Los Bronces (Chile) - an eight month commissioning delay to the expansion
project, with first copper production expected in Q4 2011.
Barro Alto (Brazil) - a 12-month commissioning delay, with first nickel
production expected in Q1 2011.
Ferrous Metals and Industries
Kumba Iron Ore`s production in 2009 is expected to increase by approximately
10% compared to 2008 as the ramp up at Sishen`s jig plant
continues. Planned 2009 capital expenditure at Sishen South has been optimised
along the critical path and first production remains scheduled for H1 2012.
Ferrous Metals and Industries` project capital expenditure for 2009 has been
reduced to $900 million.
Minas-Rio (Brazil) - a six to 12-month commissioning delay, with first iron
ore production expected in late 2011 or early 2012.
Coal
In anticipation of reduced demand during 2009 from steel customers, plans
to grow metallurgical coal production by 10% during 2009 have been curtailed and
production is expected to be marginally below 2008 levels.
The sentiment from many of the world`s end users of steel products remains
negative. Should conditions change materially, Anglo American will respond
with further adjustments to its metallurgical coal production. Anglo
American`s total 2009 coal production is also expected to be marginally
below 2008 levels.
Coal`s project capital expenditure for 2009 has been reduced to $400
million.
Financial position update
The Group`s net debt at the 2008 year end is expected to be approximately
$11.0 billion, representing a gearing level of around 30%(1).
Over the last 12 months, Anglo American has issued medium and long term
debt in the Euro and sterling bond markets, in addition to arranging new
bank financing in both Europe and South Africa. Anglo American`s only
significant debt repayments in the next two years are a $3 billion revolving
bank facility which matures in December 2009 and a GBP300 million
(c. $500m) Euro bond which matures in December 2010.
At the year end of 31 December 2008, Anglo American estimates that it is
likely to have committed undrawn bank facilities and cash deposits with a
combined value of approximately $7 billion.
Outlook
Despite the uncertain near term outlook, Anglo American continues to
believe in the medium to long term fundamentals of its core commodities,
driven primarily by the ongoing industrialisation of the major developing
markets and the economic recovery of the OECD member countries.
Anglo American plc has a unique portfolio of large scale and long life
mining assets that are well placed on their respective industry cost
curves. The strength of this portfolio and its flexibility in terms of
timing of new production, combined with the Group`s robust balance sheet,
provide a solid platform from which Anglo American will continue to grow
profitably and generate substantial shareholder value.
Note:
(1) Gearing is calculated as net debt divided by capital employed, adjusted
for investments in associates.
For further information, please contact:
United Kingdom
James Wyatt-Tilby, Media Relations
Tel: +44 (0)20 7968 8759
Anna Poulter, Investor Relations
Tel: +44 (0)20 7968 2155
Caroline Metcalfe, Investor Relations
Tel : +44 (0)20 7968 2192
South Africa
Pranill Ramchander, Media Relations
Tel: +27 (0)11 638 2592
Notes to Editors:
Anglo American plc is one of the world`s largest mining groups. With its
subsidiaries, joint ventures and associates, it is a global leader in
platinum group metals and diamonds, with significant interests in coal,
base and ferrous metals, as well as an industrial minerals business. The
Group is geographically diverse, with operations in Africa, Europe, South
and North America, Australia and Asia. (www.angloamerican.co.uk)
Date: 17/12/2008 09:30:10 Produced by the JSE SENS Department.
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