Anglo American PLC, one of the world's largest minerals companies, isn't counting on any significant improvements in base metals prices for at least the next two years, Chairman Sir Mark Moody-Stuart said in an interview March 29.
"We've adjusted accordingly, and have hunkered down," Moody-Stuart said.
Moody-Stuart was in Alaska March 28 and 29 to visit Illiama and Dillingham, communities near the proposed Pebble copper-gold project, developed through Pebble Limited Partnership, a joint venture between Anglo and Northern Dynasty Mines Ltd..
The recession may also cause Pebble Limited Partnership to put development of the large mine on a slower track, Pebble CEO John Shively said in a separate interview. "It's unlikely that any very large project can be financed in the current economic environment."
Pebble Partnership is a joint venture between Anglo American and Northern Dynasty. Major mining company Rio Tinto owns a major share of Northern Dynasty.
Moody-Stuart said there are some hopeful signs on the horizon for the minerals industry. Base metals prices declined sharply in late 2008, but appeared to stabilize in January, and have even seen some moves upward since then, he said.
Base metals like copper and zinc are mainly used in industry, so the China and North American industrial markets are the key to recovery in metals prices, Moody-Stuart said.
"China has been a key driver in metals markets over the last four years," he said. "I was just in China and despite the recession, they are sticking with a target of 8 percent growth this year. Their economic stimulus program through infrastructure construction is very important (to the world mining industry) as is an economic recovery in the U.S."
Anglo American has three major mining projects currently under development, aside from Pebble, which is still in an advanced exploration and definition stage.
"We're slowing them down a bit. It's part of what we're doing to secure the ship," to weather the recession, Moody-Stuart said.
Shively said the Pebble joint venture is taking its time on Pebble development.
"The minerals are there and they're not going anywhere," Shively said.
The partners are working to narrow options for the most efficient mining plan this year to three to four possibilities and then to select a preferred option, Shively said. Once that is done, the Pebble Partnership will present the plan to communities in the region six months before making permit applications to state and federal agencies, he said.
Moody-Stuart said he met a lot of questions in Illiamna and Dillingham about the company's plans for the mine, particularly on issues like tailings disposal, but there just isn't lot of information available until the mining plan is done, he said.
"They (people in the communities) are frustrated at the slow pace, but we're going to have to wait until next year when there is a plan, he said. "In the meantime, we're going to have to continue talking," with the communities.
Anglo American is among the world's largest producers of base metals like copper, zinc and iron ore and coal as well as strategic metals like platinum.
The company was founded 90 years ago in South Africa and today operates in 45 countries, employing 190,000 in its operations. Despite the name, Anglo American does not have major operations in the U.S. The name came about because the original capital raised by Sir Ernest Oppenheimer in forming the company in 1917 came from America as well as Britain.