Global mining giant Anglo American shares were down almost 7% after releasing a statement on Friday that it plans to cut $500 million in spending by 2026.
This is set to result in a 4% drop in production in 2024.
Anglo American shares were down by 6.6% at the time of writing on Friday.
“Miners are at the mercy of cyclical material costs, and the wheel has been turning against new CEO Duncan Wanblad—with issues compounded by operational headaches too,” explained Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.
Amid persistent inflationary pressure and a roughly 30% decline in its share price over the past year, the company has declared its intention to take more extensive measures.
Anglo American has already announced plans to cut jobs in Johannesburg and London.
The pressures leading up to this decision by the current CEO come down to decreased demand for natural resources from Anglo’s mines and the subsequent market-wide turbulence.
Overall, “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 Chief Executive Duncan Wanblad in a Friday statement.
Further, Anglo American announced plans to decrease production at its South African unit, Kumba Iron Ore, due to growing stockpiles of 9 million metric tonnes by September, exacerbated by rail bottlenecks.
The company is also implementing cost-cutting measures, emphasising higher-margin production for its platinum group metals (PGMs) operations in South Africa and placing two processing plants at its Los Bronces copper mine in Chile on care and maintenance.
Nonetheless, “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 twelve months,” said Sophie Lund-Yates.
