Anglo American said that 2016 is going to be tougher than 2015 as mining revenues were expected to continue plummeting.
Group chief executive Mark Cutifani told the African Mining Indaba in Cape Town that weak commodity prices saw the company losing about $350 million of its revenues per month in 2015.
“It’s a big number for the [mining] industry,” he said.
He, however, said that Anglo was better prepared following its recent restructuring.
The group said in December that it would consolidate its six business unit structures into three as it seeks to ensure “optimal efficiency and effectiveness” as well as provide “further opportunity to reduce the cost burden on our business”.
The three were De Beers, industrial metals and bulk commodities.
The group anticipated to deliver $3.7 billion of efficiency improvements, made up of productivity, operating costs and indirect costs by end of 2017.
“We are taking further steps to protect the balance sheet and reduce leverage. We are reducing 2015 and 2016 capital expenditure (capex) by an additional $1 billion and have reduced our 2017 capex to $2.5 billion, a 55 percent reduction versus our 2014 expenditure,” said Cutifani then.
The diversified group boss told delegates that the restructuring was a necessary process.
“If we don’t adapt we perish,” he said.
Cutifani also said that they had plans to operate at full throttle in the next two to three years.
Anglo, which owns 85 percent of De Beers, had deliberately lowered output as a result of the weak diamond market in 2015.
The diamond giant dropped its full-year production target to 29 million carats last October.
It had revised the target last July to between 29 million and 31 million carats from the previous estimate of 31 million and 32 million carats.
This was again a revision to the initial production target of 34m carats for 2015.
De Beers also revealed last December that it was expecting to produce between 26 million and 28 million carats this year.
Meanwhile, Cutifani said there was also need for governments and the private sector to forge partnerships to usher development on the continent.