Established mining companies will ride out the storm

The current volatility and uncertainty in global markets, coupled with the slowdown in the world’s major economies, has had a significant impact on commodity prices. The mining industry has already seen some high cost operations being curtailed and the credit environment is expected to limit the funding and expansion capabilities of many of the junior mining companies. Against this economic background, Anglo American is conducting a review of its project pipeline to assess capital expenditure profiles on a project by project basis, as well as intensively driving its asset optimisation programme and related cost discipline across the businesses. “Anglo American believes that its strong strategic position and the market fundamentals of its core commodities will continue to drive growth over the medium and long term, with constrained supply and growing demand led by the trend of urbanisation and industrialisation in China and other developing countries,” says Pranill Ramchander, a media spokesperson for Anglo American South Africa. “In the near term, we are looking at further ways to reduce costs, including regional office and exploration costs, while we are also carrying out a thorough review of our capital expenditure programmes and our stayin- business capex. This is an exercise in prioritising those projects in the most attractive commodity segments with the greatest investment returns. “Anglo takes long term views in terms of its investment decisions and is well positioned to ride out the current storm. We have long life mines, on the lower half of the cost curve, a strong project pipeline which is geographically diverse and a strong balance sheet,” Ramchander said.