Anglo American chief executive officer Mark Cutifani said that his company will probably meet earnings targets by increasing production and cutting expenses amid declining commodity prices.

“We have delivered on our major commitments to shareholders,” Cutifani said in a statement before the company’s investor day conference in London. “We have successfully turned around a number of our priority operations this year, principally in our copper, Kumba Iron Ore and coal businesses.”

Seventy-one percent of Anglo’s “priority assets” are now performing above plans, compared with 21 percent in 2012, Anglo said in the statement.
Cutifani, who began a review of operations after joining Anglo in April last year, plans to sell assets that fail to meet his goal of increasing the company’s return on capital to at least 15 percent by 2016. That includes the sale of four labor-intensive platinum mines in South Africa after a five-month strike that ended in June. He’s also seeking buyers for three copper mines and a smelter in Chile, Bloomberg reported.

Anglo American, which cut its capital-expenditure forecast by a range of $500 million to $800 million for this year and $800 million to $1 billion next year, delivered its Minas-Rio iron-ore project in Brazil about $400 million under its revised budget, it said.

Anglo American started iron-ore shipments from the $8.8 billion Minas-Rio Mine on Oct. 25. The start of the project, which faced delays and cost overruns since it was bought in 2008, coincides with a slump in iron-ore prices as Australian and Brazilian producers expand capacity and demand from China, the biggest user, stalls. Minas-Rio will raise production to 26.5 million metric tons a year over the next 18 months to 20 months to an operating cost of $33 to $35 per wet metric ton, Cutifani said.

Bloomberg reported that Anglo targets productivity improvements of about 80 percent from about 35 percent fewer workers through growth and restructuring, it said in the statement. It’s also looking to fund the 2016 dividend from its cash flow, Anglo said.

The focus on return on capital employed “drives the right behaviors within the business and we are moving all the levers within our control to deliver the $4 billion of additional earnings before interest and tax required for us to meet 15 percent ROCE in 2016, based on the mid-2013 commodity-price deck,” Cutifani said.