Anglo American plc has provided an update on its performance in 2023 and has outlined its capital expenditure and production guidance for the next three financial years. The company is focused on reducing costs and prioritizing capital to drive more profitable production. It has already taken action to increase business resilience and reduce costs, with $0.5 billion in annual cost efficiencies identified across its global businesses. Anglo American is also reconfiguring assets to adjust production profiles and protect longer-term value. As a result, the company expects to deliver lower unit costs in 2024 and $1.8 billion lower capital expenditure in the 2023 to 2026 period.
In terms of guidance outlook, production is expected to increase by approximately 3% in 2023, driven by the Quellaveco copper ramp-up and solid iron ore production. However, unit costs are expected to increase by around 5% due to inflation and production impacts. The effective tax rate is projected to be around 39% due to a change in profit mix. Capital expenditure for 2023 is estimated to be $5.8 billion, with a reduction of $0.2 billion due to prioritization. The company also expects a year-end working capital build of approximately $1.5 billion, subject to pricing.
For 2024, production is expected to decrease by approximately 4% as production is rescheduled to enhance value and reduce unit costs. Unit costs are expected to decrease by around 2% due to cost discipline offsetting inflation. Capital expenditure for 2024 is estimated to be $5.7 billion, including Woodsmith.
In 2025, production is expected to decrease by a further 3% due to production changes to enhance value, reduce unit costs, and scheduled maintenance. Capital expenditure for 2025 is estimated to be $5.7 billion, including Woodsmith.
In 2026, production is expected to increase by approximately 4%, benefiting from higher volumes in copper, iron ore, steelmaking coal, and diamonds. Capital expenditure for 2026 is estimated to be $5.3 billion, including Woodsmith.
Anglo American is confident in its actions to sustain the competitiveness of its assets and deliver on growth opportunities in metals and minerals. The company believes that the fundamental supply and demand picture for many metals and minerals is attractive, driven by global decarbonization efforts and increasing demand for responsibly produced raw materials. Anglo American is focused on improving resilience and capitalizing on major demand trends.