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Anglo slashes expenditure guidance by R19bn - IOL

Friday, 24 April 2020

JOHANNESBURG - Anglo American has slashed its 2020 expenditure guidance by $1billion (R19bn) as part of the globally diversified mining giant’s measures to protect the business against the coronavirus (Covid-19) pandemic uncertainties.

Group chief executive Mark Cutifani said that the company had identified cost savings of at least $500million that would include restrictions on discretionary spending, certain research and development and marketing, as well as central overheads, demobilisation of non-essential services and deferral of certain exploration and evaluation activities.

Cutifani said that the group expected a $1.5bn earnings benefit from both weaker producer currencies and oil prices, and that it was in a strong financial position for the uncertainties.

"The group had liquidity of $14.5bn at the end of March, with more than $6bn of cash, including the proceeds from $1.5bn of US bond issuances," he said.

The group said lockdowns had significantly impacted diamond production in southern Africa, manufacturing in India, and retail operations in the US.

It said consumer demand had returned in China.

The company also said the national lockdown in South Africa cut its first quarter production by 2percent, while refined Platinum Group Metals (PGM) production plunged after the Anglo Converter Plant (ACP) was shut for repairs.

It said refined platinum production fell 34percent while palladium eased 26percent on a like-for-like basis, largely on the ACP shutdown.

Meanwhile, Gold Fields said it had reduced its net debt during the quarter ended March to $1.26bn from $1.6bn in December.

The company also said that it was ramping up its South Deep mine with the recall of employees and measures to implement Covid-19 standard operating procedures.

The mine will initially operate at 50percent employment levels in line with the government directive.

Gold Fields said it would ramp up the lost production at the mine to 32000 ounces.

Chief executive Nick Holland said: "2020 will go down in history as being a year when a global pandemic disrupted and changed the world as we know it. Over the past months, the effects of Covid-19 have been pervasive."

Sibanye-Stillwater also welcomed the government’s approach to manage the pandemic.

"We fully support the measures taken thus far by the South African government to manage the Covid-19 pandemic and welcome the pragmatic approach taken to resume partial economic activity in the industry," said Sibanye-Stillwater chief executive Neal Froneman.

"Also for safeguarding the health of employees in line with the currently available global and local health guidelines and protocols."

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