Anglo American Closes Mozambique Office Amid Cost-Cuttingby
Withdrawal comes 18 months after Anglo scrapped coal deal
CEO Cutifani has pledged to reduce overhead expenses
Anglo American Plc closed its office in Mozambique, 18 months after calling off the $A540 million ($380 million) purchase of a majority stake in a coal asset in the country, as the company seeks to preserve cash in response to a commodities slump.
“As we said at the time of our half-year results, we have been reviewing our offices around the world as we seek to reduce our overhead costs across the group,” Pranill Ramchander, a spokesman for Anglo, said by e-mail from Johannesburg. “As part of that process, we took the decision to close our representative office in Maputo.” The office in the Mozambican capital shut on Wednesday.
At the end of March 2013, London-based Anglo said that despite deciding against buying a 58.9 percent stake in the Revuboe metallurgical coal project in the northeast Tete province from Talbot Group Investments, the company “expects to continue with its objective of establishing a position in the emerging metallurgical coal basin in Mozambique.”
Chief Executive Officer Mark Cutifani told investors in July that the company would “look at our overheads and indirects” in London, Johannesburg and all regional offices. “If you don’t touch product, you’re an overhead,” he said.
The office shutdown “means for the foreseeable future, Anglo are out of Mozambique coal development,” said Michael Dixon, London-based EMEA director for research company AME Group, in an e-mailed response to questions. “There would have to be sustained, dramatic improvement in coal prices for Anglo to return. Infrastructure -- port and rail -- is very constrained and will be expensive to build. Anglo has other fish to fry.”
The Revuboe project, whose minority shareholders are Nippon Steel & Sumitomo Metal Corp. with a 33.3 percent interest and South Korean steelmaker Posco with 7.8 percent, was granted its mining concession by the Mozambican government four days after Anglo withdrew from the purchase. The resource borders one Rio Tinto Group sold to ICVL of India for $50 million in 2014, having paid A$3.9 billion for it two years earlier.
Revuboe is also near Vale SA’s concession at Moatize. The Rio de Janeiro-based company is developing a project to double its output at Moatize to 22 million metric tons a year and constructing a rail line from Tete through Malawi to the northern Mozambican port of Nacala, where it has built a coal-export terminal.