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Gold/Mining/Energy : Mining News of Note -- Ignore unavailable to you. Want to Upgrade?

To: LoneClone who wrote (30490)	12/17/2008 10:25:52 PM
From: LoneClone	Read Replies (1) \| Respond to of 195027

Anglo shares rise as capex is halved to $4,5bn, no pronouncement on job cuts miningweekly.com By: Martin Creamer Published on 17th December 2008 JOHANNESBURG (miningweekly.com) – The shares of South Africa's largest mining group Anglo American rose marginally on Wednesday after it halved its 2009 capital expenditure (capex) to $4,5-billion, and steered clear of any immediate job-cut pronouncements. The capex halving came with an assurance from Anglo American CEO Cynthia Carroll that the iconic company was "well positioned to weather the current weak economic conditions". Net debt was at $11-billion, representing a 30% gearing. The revision, Anglo said, would ensure that capex was prioritised towards those businesses and development projects that were expected to perform most strongly in the near term, while not having a material detrimental effect on those projects that were already at an advanced stage of development. Capex for 2009 had been capped at $4,5-billion, a reduction of more than 50%. The capex included $1,3-billion worth of stay-in-business capex, which represented a level lower than the amount projected for 2008. The halving would be achieved principally by development-project rescheduling and level-of-expenditure revision. Capex programmes for 2010 would continue to be monitored against prevailing and forecast market conditions. "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. "We have made significant adjustments to prioritise the expenditure in those areas where we expect relative outperformance in the near term while maintaining a high degree of flexibility for our future growth. "Beyond these changes, we are making excellent progress with our asset optimisation programme and procurement and shared service initiatives, driving significant cost and efficiency improvements across the group. "With our robust balance sheet and high quality asset portfolio, Anglo American is well positioned to weather the current weak economic conditions and to continue to prosper for the benefit of all our stakeholders," Carroll said. ANGLO PLATINUM Anglo said that near-term platinum group metal (PGM) demand had been "impacted materially" by reduced North American, European and Japanese vehicle sales and Anglo Platinum had opted to respond on an ongoing basis, providing further updates on its production plans at appropriate intervals. The company would again target 2,4 million oz of refined platinum in 2009, the same level as in 2008. Total capital expenditure for 2009 had been reduced to $900 million, including $600-million on projects, through deferral of expenditure across several major projects, including Amandelbult No 4 Shaft, Twickenham, Styldrift and the second slag cleaning furnace at Waterval. BASE METALS Anglo American expected 2009 base-metals production to be maintained at levels similar to those of 2008 with the exception of copper production, which is expected to be 5% higher than 2008 due to the benefit of the debottlenecking project undertaken at the Collahuasi mine. Base metals' project capital expenditure for 2009 had, however, been reduced to $1,3 billion. There would be an eight-month commissioning delay to the Los Bronces expansion project in Chile, with first copper now expected in the fourth quarter (Q4) of 2011. There would be a 12-month commissioning delay at Barro Alto in Brazil, with the first nickel now expected in Q1 2011. FERROUS METALS Kumba Iron Ore's production in 2009 was expected to increase by 10% compared to 2008 as the ramp up at Sishen's jig plant continued. Planned 2009 capital expenditure at Sishen South has been optimised along the critical path and first production remained scheduled for the first half (H1) of 2012. The 2009 capex of the ferrous metals and industries' division had, however, been reduced to $900-million. There would be a six- to 12-month commissioning delay at Minas-Rio in Brazil, with the first iron ore now expected in late 2011 or early 2012. COAL Anglo said that plans to grow metallurgical coal production by 10% during 2009 had been curtailed and production was expected to be marginally below 2008 levels, in anticipation of reduced 2009 steel-customer demand. Should negative steel-producer sentiment change materially, Anglo American would respond with further adjustments to its metallurgical coal production. Anglo American's total 2009 coal production was also expected to be marginally below 2008 levels. Coal's project capital expenditure for 2009 had been reduced to $400 million. NET DEBT Anglo American's net debt at the 2008 year-end was expected to be $11-billion, representing a gearing level of around 30%. This compared with $6-billion net debt of BHP Billiton and $38-billion net debt of Rio Tinto. The company had, in the last 12 months, issued medium- and long-term debt in the Euro and sterling bond markets, in addition to arranging new bank financing in both Europe and South Africa. Its only significant debt repayments in the next two years were a $3-billion revolving bank facility, which matured in December 2009, and a £300-million Euro bond, which matured in December 2010. The company was likely to have committed undrawn bank facilities and cash deposits with a combined value of $7-billion at the December 31, 2008, year-end. OUTLOOK Despite the uncertain near-term outlook, Anglo American continued to believe in the medium- to long-term fundamentals of its core commodities, driven primarily by the ongoing industrialisation of the major developing markets and the economic recovery of the Organisation for Economic Cooperation and Development member countries.