Anglo American lowering 2024 mine output to cut costs, adapt to market

Anglo American PLC will reduce its production in 2024 to cut unit costs and enhance value as it adapts to market conditions, the mining company said in a Dec. 8 investor presentation.

Overall output in terms of copper equivalent production should decrease by 4% next year as production is rescheduled, including a cut at South African iron ore mine Kumba, Anglo said.

"We are reconfiguring a number of our assets to adjust the production profile to near-term constraints and market conditions and thereby protect longer-term value," the company said. "This includes reducing production at Kumba in line with prolonged logistics constraints, focusing on higher margin own-production through our [platinum group metals] processing facilities, and moving to one plant at the Los Bronces copper operation in Chile."

Such initiatives should reduce unit costs by 2% in 2024 despite high inflation, resulting in $1.8 billion lower capital expenditure in the 2023 to 2026 period, the company said.

In 2025, copper equivalent production is seen falling a further 3% before rising 4% in 2026.

Tonnage forecasts

In 2024, Anglo expects to produce between 58 million metric tons and 62 MMt of iron ore, falling further to between 57 MMt and 61 MMt in 2025 before returning to a range of 58 MMt to 62 MMt in 2026.

In copper, Anglo expects to produce between 730,000 metric tons and 790,000 metric tons in 2024, falling to between 690,000 metric tons and 750,000 metric tons in 2025 on lower grades at Collahuasi, before rising to between 760,000 metric tons and 820,000 metric tons in 2026 on a Quellaveco mine plan and grade recovery at Collahuasi, according to the presentation.

In steelmaking coal, Anglo forecasts output of between 15 MMt and 17 MMt in 2024 as it prioritizes safe and stable operations, rising to between 17 MMt and 19 MMt in 2025 and further up to between 18 MMt and 20 MMt in 2026.

This year's steelmaking coal output is expected to be 16 MMt, the company said.

2023 output up in line with guidance

Anglo's 2023 output has been largely in line with guidance, with copper equivalent production rising 3% over 2022 levels. However, unit costs have risen 5% due to mining inflation, the company said.

This year's higher production is due to the ramp-up of the major Quellaveco copper mine in Peru and solid iron ore production, which have been offset by copper ore grades in Chile, lower nickel grades and lower platinum group metals and diamonds production, it said.

"In iron ore, Minas Rio [in Brazil] has really been the star performer this year," CEO Duncan Wanblad said in the presentation. "Kumba similarly has been performing well operationally, but unfortunately the logistics just haven't been there."

Anglo has lowered volumes in recent weeks at Kumba to reduce costs to manage on-mine stockpiles, aggravated by logistics issues, Wanblad said. "As a result, we will deliver to the lower end of our production range, but will clear close to 2 MMt of stockpiled product."

South Africa's rail freight and shipping delays are seriously hindering international trade, independent trading sources reported this week.

Capex

In 2024, Anglo foresees capital expenditure of $5.7 billion, down $800 million compared with recent guidance. This is close to 2023's $5.8 billion, which reflected a reduction of $200 million from guidance, with the cuts due to prioritization, the company said. Capex is forecast at $5.7 billion in 2025, down $400 million from guidance, and $5.3 billion in 2026.

The 2024, 2025 and 2026 capex budgets include a spend on the major Woodsmith polyhalite fertilizers mine project in the UK.

In the longer term, Anglo plans investments at its Sakatti polymetallic mine project in Finland.

S&P Global Commodity Insights reporter Diana Kinch produces content for distribution on Platts Connect. S&P Global Commodity Insights is a division of S&P Global Inc.

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