Anglo American targets $1bn in cost cuts by end-2024

(Sharecast News) - Global miner Anglo American said on Friday it aimed to cut operational costs by around $1bn by the end of 2024, reducing production by about 4% as near-term constraints and volatile market conditions continued to weigh on earnings.

The company had already targeted $500m in savings, and started by axing corporate jobs and costs at head offices in Johannesburg and London among other locations.

"We are building a platform for strengthened and sustainable operational and financial performance. We took early action in 2023 to increase business resilience in the face of ongoing economic and geopolitical volatility and the current cyclical weakness in platinum group metals (PGM) and diamonds," said chief executive Duncan Wanblad.

"As a result, we have already gone a long way towards reducing our business support costs by $0.5bn by mid-2024, with an additional $0.bn in annual cost efficiencies identified across our global businesses that we expect to deliver in 2024."

PGM metals - platinum, palladium and rhodium - are used in diesel and petrol engines to cut exhaust emissions but are falling out of favour as the market shifts towards electric vehicles.

Anglo said it expected group production expected to fall by 4%, including cuts at its Kumba iron ore operation in South Africa.

Unit costs are forecast to decline by 2% - with cost discipline "more than offsetting inflation" - and capital expenditure by $800m to $5.7bn, including the UK Woodsmith fertiliser project on which it took a $1.7bn writedown in February.

Reporting by Frank Prenesti for Sharecast.com