VENETIA (miningweekly.com) – Diversified major Anglo American was giving consideration to building a new thermal coal mine in South Africa, CEO Mark Cutifani has revealed.
Anglo American Coal already has ten coal mines in South Africa, which produce 59.2-million tons of coal a year, 16-million tons of which are exported.
Speaking to journalists after the launch of the new Venetia underground diamond mine, Cutifani said that the LSE- and JSE-listed company was not focusing only on cost cutting but also on investing.
“We’re investing across the globe and we continue to invest in South Africa, making sure we’ve got the balance right.
“It’s important to remember that in the last three years, we’ve delivered three new projects in South Africa in coal, iron-ore and we’ve just launched in diamonds, and we are looking at a new coal mine to support future power generation,” said Cutifani, who is also chairperson of diamond company De Beers, which this week turned the first sod to start the construction phase of Venetia’s new underground diamond mine, in which R20-billion is being invested.
Against that background, it was “a little unfair” to highlight cost-cutting alone.
Anglo owns 85% of De Beers and the Republic of Botswana the remaining 15%.
Mining Weekly Online reported in June last year that State electricity utility Eskom had agreed a capital-sharing arrangement with Anglo for the proposed greenfield New Largo coal mine, in Mpumalanga, which would produce coal for Eskom’s 4 800 MW Kusile power station currently under construction.
At the time, Eskom CE Brian Dames reported that Eskom had finalised an agreement with Anglo for New Largo, which would cost between R16-billion and R20-billion to develop.
Anglo had previously indicated a possible capital cost of around R12.5-billion for New Largo, which would be able to deliver 12-million tons a year to Kusile. At present, Eskom buys coal at an average of R230/t.
On the company’s stringent current cost controls, Cutifani said that with commodity prices lower, the company has had to make sure that costs shifted below the prices.
“Unfortunately there are some tough things you have to do”, but it was certainly not all about cost-cutting.
“The most important is to manage within our means. We have to be very careful about where we spend our money and then we have to make sure that we’ve got the right margins.
“But as a company, we’re going to remain balanced and continue to support South Africa - but at the same time we have to be profitable,” added Cutifani.
In the last 14 years alone, Anglo has invested R200-billion in South Africa.
The average estimate of 20 analysts surveyed by Bloomberg is that Anglo may report underlying earnings of $2.1-billion this year.