JOHANNESBURG (Reuters) - Global mining firm Anglo American (AAL.L) plans to lower costs at its iron ore mines in South Africa and Brazil after boosting its total annual output for the steelmaking ingredient, sending its shares up 9 percent.
Anglo American is battling low commodity prices and slowing growth in top copper consumer China that have forced mining companies around the world to cut spending to preserve cash.
Anglo has said it would sell assets, suspend dividends until the end of 2016 and whittle its business down to three divisions to cope with the severe fall in commodity prices.
Anglo’s Kumba Iron Ore (KIOJ.J) said on Thursday it would scale back operations, cut costs and planned to reduce jobs at its flagship Sishen mine in South Africa, the largest iron ore operation in Africa.
Anglo shares, down 77 percent since the beginning of last year, were up 9 percent by 1122 GMT (6:22 a.m. ET).
“The market is quite positive that they are taking the steps to right size the company. Downsizing is the first step to turning the company around,” Avior Capital Markets equity analyst Wade Napier said.
Anglo American also said it was revising its production strategy for Brazil’s Minas-Rio mine to ensure lower operating costs, without given further details.
Minas-Rio had been plagued by delays and cost overruns since Anglo bought it for $5.5 billion in two stages in 2007-2008.
Anglo said production at Kumba fell 7 percent to 44.9 million tonnes last year - but beat its own target, while output at Minas-Rio rose to 9.2 million tonnes from 0.7 million tonnes.
It said annual production of thermal coal, nickel, copper and diamonds all fell last year though platinum output rose 25 percent to 2.3 million ounces as the company ramped up output following strikes in 2014.
Copper and nickel output were up in the fourth quarter of last year, compared to the same quarter in 2014.
“These results may remind the market of some of the better quality assets within the company’s portfolio,” SP Angel analysts said in a note.
“On the bulk side the focus is on reducing costs at Kumba and Minas Rio.”
Anglo has said it would set out next month what its future portfolio would look like after selling and closing some mines.
Additional reporting by Peroshni Govender; editing by David Clarke and David Evans