Anglo’s budget cuts could cost jobs

Johannesburg – Anglo American last week cut its local capital expenditure budget for next year at Anglo Platinum (Angloplat) and Kumba Iron Ore by as much as 43 per cent due to shrinking demand and falling metal prices.

Analysts said the spending cuts could cause job losses.
Angloplat reduced its capital expenditure budget for next year to R9,1 billion, including R6 billion on projects.
Kumba Iron Ore said it had cut next year’s capital expenditure by about 20 per cent to US$425 million (R4,34 billion).
Angloplat would defer expenditure on several major projects, including Amandelbult, Twickenham and Styldrift, as well as the second slag cleaning furnace at Waterval.
A source at Anglo said that before the cutbacks Angloplat had intended to spend up to R18 billion next year.
Cynthia Carroll, Anglo’s chief executive, said: ‘We have taken decisive action as a result of the fast-changing economic climate and have undertaken a thorough re-evaluation of our stay-in-business and development requirements.’
In June, Angloplat said it expected to spend between R12 billion and R13 billion due to cost pressures and change of scope requirements, including emergency generators.
Henk Groenewald, a Coronation Fund Managers analyst, said Angloplat’s forecast to produce 2,4 million ounces of platinum next year was 10 per cent below what had been expected. The group was likely to report 2,2 million ounces of platinum output this year, he added.
Shoaib Vayej, a Sanlam Investment Management analyst, said the production target was ‘disappointing’, adding that the group ‘has missed its targets for the last three years’.
Groenwald said there could be job cuts at Angloplat, but he had ‘no idea of how many’.
Anglo spokesperson Pranill Ramchander said it ‘cannot yet predict the likely impact on head count. We will continue to work closely with governments and unions to minimise the impact of these necessary changes to our business as a result of the sharply weaker economic environment.’
Anglo employs 150 000 people worldwide with 110 000 of them working in South Africa.
Angloplat has about 80 000 local employees and contractors and Kumba employs 10 025.
Vayej said despite the cut at Kumba Iron Ore, he expected the group to take up more debt.
In anticipation of lower demand for coal from the steel industry, Anglo said it had shelved plans to grow its metallurgical coal output 10 percent next year.
The mining group slashed its worldwide capital expenditure by 55 percent to $4,5 billion as a result of the declines in commodity prices and demand.
James Wyatt-Tilby, an Anglo spokesperson, said the group had been planning to spend $10 billion worldwide next year. – Business Report