Mining may still not have hit rock bottom, admits Anglo American chief

Mark Cutifani of Anglo American gave a gloomy forecast for miners in the next 12 months

Mark Cutifani of Anglo American gave a gloomy forecast for miners in the next 12 months (AFP)

The chief executive of the mining giant Anglo American has warned that the industry is in a fight for survival, saying things “may still get worse before they get better”.

Speaking at an industry conference in Cape Town, South Africa, Mark Cutifani yesterday blamed some major producers for refusing to cut supply in the face of much weaker demand in order to maintain market share and drive competitors out of business, which he said was having a “net negative effect”.

In a gloomy forecast for the next 12 months, he added: “We can’t rely on a reversal of this price slump any time soon – 2016 is already shaping up to be the most challenging yet. Opinions are divided on whether we have reached the bottom of the cycle … so things may still get worse before they get better. If we don’t adapt, we perish.”

In December Mr Cutifani took drastic action to address the worldwide rout in commodity markets by announcing plans to slash more than 80,000 jobs by 2017, shelve the dividend, and sell off more than half of Anglo American’s mines in a major restructuring of the business.

It comes after a savage 2015 for the sector, as demand from metal-hungry China slowed, driving down the cost of nickel, copper and iron ore by around a third – leaving Anglo American as the worst performing stock in the FTSE 100 last year. China uses around 50 per cent of the world’s nickel – a key ingredient in stainless steel – but the price hit its lowest level since 2003 yesterday.

Mr Cutifani will give more details over the future of the company’s portfolio at next week’s annual results. “For the assets that we choose to exit, it is about giving many of them and their employees a more sustainable future under new ownership that is better suited to focus attention and capital on those assets,” he said.

Mr Cutifani’s comments came as Amplats, the platinum miner controlled by Anglo American, placed all expansion plans on hold yesterday after writing $878m (£605m) off the value of its mines.

The cost of platinum – used in products ranging from catalytic converters to jewellery – has halved in value over the past five years.

The gold miner Randgold Resources, however, delivered some rare cheer from the sector with a 10 per cent hike in its dividend, which lifted its shares 13 per cent to 6,000p.

Production of gold reached an all-time high despite an 11 per cent fall in full-year profits to $572.2m. Its shares have risen more than 40 per cent since the start of the year as market turmoil increases the safe-haven allure of the precious metal.