UPDATE: Anglo American CEO: Long-Term Mining Outlook Robust
September 28 2009 - 3:52AM
Dow Jones News
Anglo American PLC (AAUK) Chief Executive Cynthia Carroll
predicted Monday a "very robust" long-term outlook for the mining
industry but said there were question marks over the sustainability
of the recovery so far.
"We may see some easing in growth in the short term but the
longer-term fundamentals remain sound. The long-term fundamentals
for the mining industry remain very robust from both the demand and
supply sides," Carroll said at a Brisbane mining club luncheon.
Continued debt reduction by households, companies and banks and
the shadow of rising unemployment and large budget deficits in
major Western economies were still a "great concern," she said.
Carroll tipped copper, iron ore, coking coal, platinum and
diamonds - all major products of Anglo - as the commodities with
the strongest future fundamentals.
"The industry has seen curtailment of many high-cost operations
in nickel, iron ore and coking coal...At the same time, the
difficult financing conditions are expected to continue, which will
impact the funding and timing of many potential new mines and
expansions, constraining supply as economic growth returns," she
said.
Since the start of the year, prices for commodities such as
copper have more than doubled, led by record copper, coal and
aluminum imports into China.
"While recognizing the interdependence of the world's leading
economies, policymakers in both China and India have made clear
their determination to support domestic demand growth to offset the
weakness of their exports to the major western economies," Carroll
said.
Anglo's US$17 billion project pipeline would increase "organic
output growth by a third by 2013," Carroll said, excluding
unapproved projects.
Aside from the trials of steering a business through the global
financial crisis, during her tenure Carroll has had to address the
company's "appalling" safety record and respond to a merger
proposal from rival Xstrata PLC.
In the years prior to Carroll's appointment in late 2006
hundreds of workers died in the company's mines, with South
Africa's deep-level platinum operations proving the worst for
safety.
Fatalities have fallen by 52% over the last two years.
Streamlining of operations and cost reductions would deliver
strong savings with over US$1 billion in savings expected by the
end of 2009 and US$2 billion by 2011, she said.
Meantime, Xstrata said a combined group would generate at least
US$1 billion a year in cost savings and be better positioned to
compete against larger peers such as BHP Billiton Ltd.
-By Elisabeth Behrmann, Dow Jones Newswires;
61-2-8272-4689 elisabeth.behrmann@dowjones.com