Anglo American is expected to announce a $4 billion (£2.7 billion) cut in capital expenditure next year as it lowers production to cope with a drop in demand for metals.

The mining group is likely to slow expansion in Chile, Brazil and South Africa after a collapse in commodity prices over the past three months. Thousands of jobs could go as it looks to nearly halve its $9 billion planned capital expenditure budget. A statement will be made on Wednesday.

Rio Tinto, the Anglo-Australian miner, announced this week that it was laying off 14,000 workers and cutting its spending by $5 billion. Other major mining groups are also likely to react to the downturn in demand for raw materials by mothballing mines and shutting down new projects.

Despite Anglo's anticipated aggressive cuts to spending, the group is considered one of the best-placed miners to weather the economic downturn. Six months ago Anglo was valued at £41 billion, making it the fourth-largest mining group in the world. Its share price has since more than halved to £15, valuing it at £19.75billion.

But shares in the other leading mining companies have fallen even further; Xstrata and Rio Tinto are down 83 per cent and 75 per cent respectively. That has allowed Anglo to vault ahead of them in market value and it is now the world's second-largest mining group, behind BHP Billiton, which is worth more than £64 billion. BHP's share price has fallen by only 36 per cent in the past six months.

Anglo's position today reflects its conservative strategy in recent years. Xstrata and Rio have both made large acquisitions that have burdened them with huge amounts of debt. Rio borrowed $40 billion to buy Alcan last year and has to find $8.9 billion in the next ten months to repay the first part of the loan. The company is cutting capital expenditure and attempting to sell assets.

Anglo is understood to have come under pressure from leading institutional investors that wanted it to join the acquisition trail. However, Cynthia Carroll, who became Anglo's chief executive last year, refused to bid for targets such as Xstrata and concentrated instead on restructuring the company.

Charles Cooper, mining analyst at Evolution Securities, said: “What Cynthia Carroll has done is to concentrate on trimming the fat at Anglo, which had been built up over the past 50 years. The way she tackled that was spot on.”

Although Anglo is not as indebted as some of its rivals, it had big expansion plans for next year and these have been revised to take account of the fall in demand for metals. The expansion of the Barro Alto nickel mine in Brazil is expected to be delayed by up to a year, while the Los Bronces copper mine in Chile is also likely to see cutbacks.

Anglo is also expected to cancel all expansion projects in its platinum division and may slow work at Minas-Rio, an iron ore project that it bought in Brazil this year.

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