Outlook
Despite short term uncertainty persisting in the global economy, particularly in Europe, the longer term outlook for Anglo American’s diversified mix of commodities remains strong. Sustained growth in the emerging economies should underpin robust demand for commodities, albeit with a degree of short term volatility, while the signs of economic recovery and stimulus in the US should provide a further fillip.
Rapid ‘catch-up’ in living standards, notably in China and India, combined with a medium term need for infrastructure replacement in the developed countries, present an attractive proposition for the early cycle commodities. Over time the considerable scope for an expanding middle class in many emerging economies should boost consumption, which positions Anglo American well due to its breadth of unique mid to late cycle exposure from copper and nickel to platinum and diamonds.
Prices for Anglo American’s commodities are expected to be robust as widespread supply constraints and the challenges producers face in bringing new supply into production will lead to increasing capital intensity and tight market fundamentals. Costs are likely to continue to be affected by strong producer currencies and increasing prices for key inputs.