Anglo American to shed 85000 jobs to cope with mining slump

It will also consolidate from six to three businesses.

The platinum miner has suspended its pay-outs for the second half of this year and for 2016, it revealed in a statement on Tuesday.

Anglo’s assets will shrink from around 50 facilities to the “low 20s” by the end of the restructuring and its workforce will drop to around 50,000. Some $3.7 billion of cost and productivity improvements are underway and set to be completed by 2017. Anglo expects impairments of $3.7 billion to $4.7 billion because of weak prices and asset closures. Its portfolio offers bulk commodities and base metals to precious metals and diamonds (through De Beers).

Many commodities are trading around the lowest levels they’ve seen since the recession that followed the global financial crisis.

JOHANNESBURG, Dec 8 (Reuters) – Anglo American will sell more assets, suspend dividends until the end of 2016 and whittle down its business divisions to three from six in the face of severe commodity price falls, the mining company said on Tuesday. Anglo had started with 70 assets, Mr Cutifani said.

The disposals target was increased to $4-billion, with Phosphates and Niobium confirmed for sale.

“While we have continued to deliver our business restructuring and performance objectives across the board, the severity of commodity price deterioration requires bolder action”, Chief Executive Officer Mark Cutifani said.

Plunging commodity prices have heaped pressure on mining companies’ credit ratings and dividends, leading to a number of business restructurings.

Anglo is among the most diversified miners, with EBIT spread among iron ore and manganese (27%), coal (14%), copper (9%), diamonds (31%) and platinum (14%) in H1 2015, but the miner is being penalized for its diversity, as almost all commodities have amid softening demand by China.

Anglo’s announcements, as part of its investor day, come as sector rival Rio Tinto said it would slash its spending next year owing to sliding metals prices.

So far, Anglo said it had secured $2 billion in assets sales.

The group’s share price, however, was down after Anglo also suspended dividends for the remainder of 2015 and in 2016 and investors viewed the company’s plans as only a short-term solution.

“No one likes to suspend a dividend”, Cutifani said, according to the WSJ. Shares in Glencore, for example, have been hit recently by concerns over its ability to service sky-high debts at a time of low commodity prices.