Anglo American May Slash Spending 40%, Cut Output
[2008-12-23 17:04:27]
Dec. 15 (Bloomberg) -- Anglo American Plc, the world’s biggest platinum producer, may cut spending plans for next year by more than 40 percent, reduce platinum output and delay iron- ore projects as metals prices sink.
“Anglo will now be in cash preservation mode,” Johann Pretorius, an analyst at Nedcor Securities, who has a “hold” recommendation on the stock, said by phone from Johannesburg today. “Given the big pullback in demand, most commodities are in oversupply.”
The company, set to unveil a review of operations Dec. 17, follows Rio Tinto Group, the world’s third-biggest mining company, in paring expenditure. Rio last week said it will slash spending by $5 billion and cut 14,000 jobs after prices for metals including copper, nickel and zinc fell. Australia, the world’s biggest iron-ore exporter, today cut its fiscal 2009 forecast for mine output 16 percent on declining demand for the steelmaking ingredient.
Anglo spokesman James Wyatt-Tilby said last week the company wouldn’t comment on details of its review before Dec. 17.
The company may cut fiscal 2009 capital expenditure by $4 billion, deferring its Minas-Rio iron ore project in Brazil, Los Bronces copper mine expansion in Chile and Quellaveco base metals development in Peru, Pretorius said. The Kumba Iron Ore Ltd. unit may also curtail production in South Africa, he said.
Platinum Slump
“The biggest concern is what is going to happen with Anglo Platinum,” Matt Brenzel, a fund manager who helps oversee about $5 billion at Cape Town’s Cadiz African Harvest Asset Management, said by phone. “The cold hard facts of the market are very much in favor of cutbacks.”
Platinum has declined 45 percent this year, prompting producer Lonmin Plc to dispose of as many as 6,000 workers and Impala Platinum Holdings Ltd. to warn of “agony” unless output is curtailed.
“Drastic action is needed” among platinum companies, Pretorius said, adding Anglo may reduce output in South Africa, source of more than three-quarters of the world’s output.
Anglo Chief Executive Cynthia Carroll should cut 2009 capital spending by at least $4 billion to allow the company to take advantage of acquisition opportunities after mining company valuations slumped, said Paul Cliff, a London-based analyst with Nomura Securities. Carroll “can benefit by picking up assets at hugely depressed valuations,” he said.
Share Buybacks
The company may also say it will slow the rate at which it buys back shares, Mark Rule, an analyst at BoE Private Clients, said by telephone from Cape Town, adding Anglo probably won’t suspend the program.
Anglo last bought back stock on Oct. 2, when it purchased 50,000 shares at 17.19 pounds ($25) to 18.58 pounds each. In July, it said a $4 billion buyback program announced in August 2007 was 35 percent complete.
The company rose 44 pence, or 2.9 percent, to 1,542 pence at the close on the London Stock Exchange, paring the decline this year to 50 percent.
“Anglo will now be in cash preservation mode,” Johann Pretorius, an analyst at Nedcor Securities, who has a “hold” recommendation on the stock, said by phone from Johannesburg today. “Given the big pullback in demand, most commodities are in oversupply.”
The company, set to unveil a review of operations Dec. 17, follows Rio Tinto Group, the world’s third-biggest mining company, in paring expenditure. Rio last week said it will slash spending by $5 billion and cut 14,000 jobs after prices for metals including copper, nickel and zinc fell. Australia, the world’s biggest iron-ore exporter, today cut its fiscal 2009 forecast for mine output 16 percent on declining demand for the steelmaking ingredient.
Anglo spokesman James Wyatt-Tilby said last week the company wouldn’t comment on details of its review before Dec. 17.
The company may cut fiscal 2009 capital expenditure by $4 billion, deferring its Minas-Rio iron ore project in Brazil, Los Bronces copper mine expansion in Chile and Quellaveco base metals development in Peru, Pretorius said. The Kumba Iron Ore Ltd. unit may also curtail production in South Africa, he said.
Platinum Slump
“The biggest concern is what is going to happen with Anglo Platinum,” Matt Brenzel, a fund manager who helps oversee about $5 billion at Cape Town’s Cadiz African Harvest Asset Management, said by phone. “The cold hard facts of the market are very much in favor of cutbacks.”
Platinum has declined 45 percent this year, prompting producer Lonmin Plc to dispose of as many as 6,000 workers and Impala Platinum Holdings Ltd. to warn of “agony” unless output is curtailed.
“Drastic action is needed” among platinum companies, Pretorius said, adding Anglo may reduce output in South Africa, source of more than three-quarters of the world’s output.
Anglo Chief Executive Cynthia Carroll should cut 2009 capital spending by at least $4 billion to allow the company to take advantage of acquisition opportunities after mining company valuations slumped, said Paul Cliff, a London-based analyst with Nomura Securities. Carroll “can benefit by picking up assets at hugely depressed valuations,” he said.
Share Buybacks
The company may also say it will slow the rate at which it buys back shares, Mark Rule, an analyst at BoE Private Clients, said by telephone from Cape Town, adding Anglo probably won’t suspend the program.
Anglo last bought back stock on Oct. 2, when it purchased 50,000 shares at 17.19 pounds ($25) to 18.58 pounds each. In July, it said a $4 billion buyback program announced in August 2007 was 35 percent complete.
The company rose 44 pence, or 2.9 percent, to 1,542 pence at the close on the London Stock Exchange, paring the decline this year to 50 percent.
Source: 中铝网
Keywords:aluminum
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