Anglo American has confirmed today (17th December) that it will be reducing its capital expenditure by 50 per cent to $4.5 billion next year in light of the current depressed PGM prices.

Company subsidiary Anglo Platinum, the world's largest producer of the precious metal, has reduced planned capital expenditure for 2009 to $900 million, including $600 million on its projects.

This will be achieved by deferring expenditure on a number of its current developments, including Amandelbult No.4 Shaft, Twickenham, Styldrift and the second slag cleaning furnace at Waterval.

Explaining the move, Anglo American Chief Executive Cynthia Carroll said in a statement: "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."

Anglo Platinum also confirmed that it is planning to produce 2.4 million ounces of refined platinum in 2009 - the same as its target for this year - and that it will continue to monitor market conditions in relation to its capital expenditure plans for 2010.

While the company statement made no reference to potential retrenchments, Pranill Ramchander, Anglo American's Johannesburg-based spokesman, claimed that it will attempt to keep job losses to a minimum.

"We haven't yet predicted the impact the capital expenditure cut will have on the head count, but we are working with the appropriate authorities to minimise the impact of job cuts," he told the Mail and Guardian Online.

The move has been viewed by some commentators as underlining the company's lack of confidence in the PGM market, despite Ms Carroll's claims that it is "maintaining a high degree of flexibility for our future growth".

For instance, Johan de Kock, Head of Research at Metropolitan Asset Managers, which manages around $5.7 billion worth of assets, told Bloomberg: "Anglo is basically saying that for two years we're going to see a weak commodities market."

According to Reuters, Anglo Platinum's output accounts for around 40 per cent of the global supply of the metal, which is largely used to make emissions-reducing catalytic converters and luxury jewellery.

Sources:

Anglo American reduces 2009 capital expenditure by more than 50% to $4.5 billion (17/12/08)
http://www.angloamerican.co.uk/aa/media/releases/2008pr/2008-12-17/

Anglo will 'try' to minimise job cuts (17/12/08)
http://www.mg.co.za/article/2008-12-17-anglo-will-try-to-minimise-job-cuts

Angloplat reduces 2009 capex to 9.1 billion rand (17/12/08)
http://africa.reuters.com/business/news/usnJOE4BG04X.html

Anglo Platinum surprises with no job cuts, R9,1bn capex, 2,4m oz standstill (17/12/08)
http://www.miningweekly.com/article.php?a_id=149913

Anglo American Cuts Spending on Metal Price Rout (Update2) (17/12/08)
http://www.bloomberg.com/apps/news?pid=20601087&sid=atJEynu9ay74&refer=home