Anglo American PLC (LSE:AAL) has unveiled its new medium-term targets, focused on bolstering its resilience in the face of current cyclical weakness in platinum group metals and diamonds, but with attractive prospects for energy transition metals.
The FTSE 100 mining group anticipates a reduction in production over the next two years, with a focus on reducing unit costs and capital expenditure, a tactical shift aimed at navigating market volatility and improving operational efficiency.
It said has already "gone a long way" towards reducing business support costs by US$0.5 billion by the middle of next year, with an additional US$0.5 billion in annual cost efficiencies also now expected to be delivered in 2024.
For the current calendar year, production increased by around 3%, with unit costs up 5% and capex of US$5.8 billion, down US$0.2 billion from the year before.
In 2024, production is expected to decrease 4%, while unit costs are projected to drop by around 2% and capex of $5.7 billion, a reduction of around $0.8 billion from previous guidance.
The year 2025 follows a similar pattern, with a further production decrease of around 3% and capex maintaining at the same level, including significant investment in the Woodsmith fertiliser project in North Yorkshire.
"The prospects for mined products have rarely looked better," said chief executive Duncan Wanblad in the statement, but due to the continuing macro volatility, "we are being deliberate in reducing our costs and prioritising our capital to drive more profitable production on a sustainable basis".
He said focusing on costs and cash generation included reducing iron ore production from Kumba, and focusing on higher-margin production at the group's PGMs processing facilities, and moving to one plant at the Los Bronces copper operation in Chile.
"We are improving our resilience and ensuring we are set up to grow the value of our business into the major demand trends, drawing on the bench of well sequenced margin-enhancing project options within Anglo American," he said.