Anglo reviews all capital spending

ANGLO American would make an announcement by the middle of this month on the outcome of a review into all its capital spending, a spokesman said yesterday. He was asked to respond to UK Sunday press reports that Anglo would cut billions of dollars off planned expansion budgets by stopping or deferring projects, especially in nickel and platinum. The Sunday Times and Sunday Telegraph said spending would be cut as much as $4bn-5bn. Anglo American CEO Cynthia Carroll said in September the group had $15bn of approved expansion projects for the next eight years, and there was another $30bn of projects still to be approved. Other major resources groups have announced cutbacks in various operations, particularly those that supply the steel industry, in reaction to the slump in base and precious metals prices. BHP Billiton said last week it was cutting production of manganese ore and manganese alloys in SA and Australia. It said previously it would reduce pellet production at Samarco in Brazil. But the group also approved spending of $245m on redeveloping its oil-drilling operations off the northwest coast of Australia, and it would revive a uranium project at Yeelirrie in Australia. Rio Tinto is cutting iron-ore shipments from its Pilbara mines but, like Billiton, it is continuing to invest in some areas. It recently earmarked $228m for a turbine at the Shipshaw power station and $300m extra spending to modernise the Kitimat aluminium smelter, both in Canada. Xstrata has said it would put its nickel operations at Falcondo in the Dominican Republic on care and maintenance. In SA, it suspended 11 of its ferrochrome furnaces or 52% of annual capacity. African Rainbow Minerals and Assmang said yesterday they would shut a third ferrochrome furnace, leaving only one in operation, equivalent to 30% of annual production. Vale, the world’s biggest iron-ore producer, cut iron-ore production in Brazil and nickel output in Canada, but decided recently to spend $5bn on a new steel mill in Brazil to come on stream in 2013. Fairfax analyst John Meyer said metals prices would start recovering in the second quarter of next year as governments and institutions invested in recovering industrial growth. He predicted copper would drop to $3500/ton next year and nickel to $10000/ton, but both would recover in 2010. He also forecast gold would reach $1000/oz by 2010 on a weaker dollar and fear of inflation. Source: businessday.co.za