Anglo American, the mining giant, is slashing next year’s capital expenditure in half to $4.5 billion (£2.8 billion), following an "unprecedented" period of decline in commodity prices and the global slump in demand for new cars.

The company will reduce its original $9 billion spending target by 50 per cent by delaying a number of development projects and expansion plans in Chile and Brazil.

The company also said this morning: "The group's capital expenditure programmes for 2010 will continue to be monitored against prevailing and forecast market conditions."

Anglo is the latest mining group to cut spending as tumbling commodity prices take their toll and the global slowdown hits demand. Last week, Rio Tinto announced plans to cut 14,000 jobs in an effort to reduce expenditure by $5 billion.

The company said today: "Anglo American has completed a wide ranging review of its capital expenditure programme in recent weeks, at a time when the mining industry has experienced an unprecedented period of rapid declines in commodity prices due to global economic uncertainty.

"Such circumstances present a very different near-term outlook and a clear need to adjust the group's investment plans."

Anglo American's platinum business has been particularly hit by the fall in car sales in the US, Europe and Japan, which has affected demand for the metal that is used in autocatalysts, which are installed between a car's engine and the exhaust pipe.

Capital expenditure in Anglo American's platinum business will be halved to $900 million for 2009 by deferring internal projects and it expects to produce 2.4 million ounces of the metal compared with a previous forecast of 2.6 million ounces.

Base metal production will be maintained at similar levels to 2008, but Anglo America said spending will fall to $1.3 billion in 2009 by postponing copper production for eight months at the Los Bronces mine in Chile.

Copper production is now expected to begin by the fourth quarter of 2011.

Nickel mining in Barro Alto in Brazil will now be delayed for a year, with production now due to start in the first quarter of 2011.

While iron ore production is expected to rise by 10 per cent in 2009, and production at Sishen South in South Africa is on course for the first half of 2012, the Minas-Rio project in Brazil has been postponed for between six months to a year. As a result, project capital expenditure for 2009 has been reduced to $900 million.

Coal production is expected to be below this year's level and spending will be reduced to $400 million.

Anglo American said it expects it debt to hit $11 billion by the end of the year.

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