Anglo American to cut billions from 2009 mine spending

London broadsheet newspaper reports say that major miner Anglo American will slash billions of dollars from its 2009 expenditure programmes.

LONDON - 

Reports in both the UK's Sunday Times and Sunday Telegraph this weekend suggest that the world's third or fourth largest mining company, Anglo American Corporation (AAL.L), is to make billions of dollars of cuts in its planned 2009 spending through halting or delaying previously planned projects.

According to the Sunday Times, Cynthia Carroll, Anglo's CEO is ‘to take an axe' to the company's capital spending programme and cut expenditure in half by some $4 billion in 2009 as a rapid reaction to the huge downturn in the metals sector which has been experienced over the past few months.

Anglo has been conducting an internal review of its spending plans in the light of the changed economic conditions and the results are expected within the next couple of weeks.  It is expected that the company will call a temporary halt to a number of new projects and expansions which will affect thousands of jobs worldwide.

In particular it is thought that expansion plans in the nickel and platinum sectors will be affected.  The programme could also include temporary closures at some of its South African platinum operations where the company is thought to be making heavy losses at some of its key mining operations at current platinum group metal prices.

Anglo is obviously not alone in making cutbacks of this type in response to the current market fallout and joins other majors such as BHP Billiton, Rio Tinto, Vale, Xstrata, Freeport McMoran etc. in implementing major project curtailments. 

This rapid reaction by the majors to prevent cash burn, however, is thought in some quarters to perhaps be an overreaction and could lead to huge anomalies in the medium-term supply/demand situation which could lead to serious shortages in the next few years.  With small miners and juniors unable to access capital and the majors cutting back drastically, any global economic recovery will now likely see the world short of key metals and materials at some point in the relatively near future, and a consequent sharp recovery in prices.

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