After doing what it could to cut costs from its mining “engine room”‚ Anglo American intends shedding 54000 jobs by selling 15 mines and excising 6000 office jobs by the end of next year to enable it to weather a globally weak commodity market.
The removal of a third of its 152000-strong global workforce comes as Anglo prepares for a more difficult second half of the year after a punishing interim period in which prices and demand had “deteriorated more than expected”‚ chief executive Mark Cutifani said at the weekend.
Anglo on Friday reported an attributable loss of $3.02-billion for the six months to the end of last month against a $1.46-billion profit in the same period last year. It has improved on productivity and costs since he took over as CEO in April 2013‚ Cutifani says.
“We very deliberately started with the engine room. In my experience in driving major change it is very difficult to take on the engine room and overheads at the same time because it creates confusion. Now we are in the second phase‚ which is certainly necessary because of market conditions‚” he said.
“We need to do a lot more because prices are continuing to deteriorate.”
The mine sales were not country focused‚ he said. The job cuts include a reduction in the number of people who do not touch the company’s product to 7000‚ from 13000‚ with 4000 employees being retrenched and 2000 more leaving Anglo with the sold assets – generating $500-million a year in savings.
In the past 18 months‚ Anglo has used sales and closures to cut its portfolio to 55 mines from 68 mines that employed 162000 people. By next year‚ it will have 40 mines and 98000 workers.
“We have cut production and closed mines in coal in Canada and Australia in particular. We’ve shut three platinum shafts‚ cutting 24% of our own mine production and we’ve pulled back production guidance in diamonds‚” Cutifani said.
While Anglo considered the operating environment in the countries in which it has mines‚ the disposal decision hinged more on the quality of assets.
“We look at each mine and its ability to generate cash and a future and we make the decision‚ particularly in SA‚ at the asset level‚” he said.
Anglo expects its 40 remaining mines to move down the cost curve‚ with the reduced workforce and improved productivity making it far more competitive‚ Cutifani said.
It was targeting $1.5-billion more in cost savings and productivity gains for the balance of this year and next. It added about $150-million to interim earnings by taking over the marketing of its own minerals.
It has already put platinum mines in SA‚ copper mines in Chile as well as coal mines in SA and Australia on the block‚ with the copper disposal process the most advanced‚ he said.
Its subsidiary‚ Anglo American Platinum‚ is battling to exit its Rustenburg and Union mines‚ postponing a decision last month to sell or list the mines.
“Anglo has had limited success in divesting noncore assets in platinum‚ copper and coal so far‚ but management has indicated that more asset sales are imminent‚” global investment bank Jefferies said on Friday.
“Proceeds from the sale of low-margin assets would be helpful‚ even if done at suboptimal prices. Based on our analysis‚ balance sheet is more important than profit and loss in this environment of weakening commodity prices‚ it said.
The asset disposals will go on even if Anglo achieves the $3-billion target it has set for the disposals‚ Cutifani said. “If we go above the $3-billion threshold it would be well and good. We’d redeploy the capital to other longer-life‚ core assets‚” he said‚ adding: “I’m not out there looking at anything from the merger and acquisition perspective.”
This month Anglo completed the sale of its 50% stake in Lafarge Tarmac for $1.6-billion‚ taking it over the halfway mark of its $3-billion target and‚ critically‚ bringing its net debt to $11.9-billion‚ below the $12-billion mark and giving the board further reason to maintain its interim dividend at a steady $0.32 a share.
Anglo had widely been expected to withhold its dividend to shore up its debt-heavy balance sheet. It paid shareholders a total of $1.1-billion last year and a number of analysts argued it would be better served by not repeating the exercise this year.
Anglo plans to shed 54000 jobs
The removal of a third of its 152000-strong global workforce comes as Anglo prepares for a more difficult second half of the year after a punishing interim period in which prices and demand had “deteriorated more than expected”‚ chief executive Mark Cutifani said at the weekend.
Anglo on Friday reported an attributable loss of $3.02-billion for the six months to the end of last month against a $1.46-billion profit in the same period last year. It has improved on productivity and costs since he took over as CEO in April 2013‚ Cutifani says.
“We very deliberately started with the engine room. In my experience in driving major change it is very difficult to take on the engine room and overheads at the same time because it creates confusion. Now we are in the second phase‚ which is certainly necessary because of market conditions‚” he said.
“We need to do a lot more because prices are continuing to deteriorate.”
The mine sales were not country focused‚ he said. The job cuts include a reduction in the number of people who do not touch the company’s product to 7000‚ from 13000‚ with 4000 employees being retrenched and 2000 more leaving Anglo with the sold assets – generating $500-million a year in savings.
In the past 18 months‚ Anglo has used sales and closures to cut its portfolio to 55 mines from 68 mines that employed 162000 people. By next year‚ it will have 40 mines and 98000 workers.
“We have cut production and closed mines in coal in Canada and Australia in particular. We’ve shut three platinum shafts‚ cutting 24% of our own mine production and we’ve pulled back production guidance in diamonds‚” Cutifani said.
While Anglo considered the operating environment in the countries in which it has mines‚ the disposal decision hinged more on the quality of assets.
“We look at each mine and its ability to generate cash and a future and we make the decision‚ particularly in SA‚ at the asset level‚” he said.
Anglo expects its 40 remaining mines to move down the cost curve‚ with the reduced workforce and improved productivity making it far more competitive‚ Cutifani said.
It was targeting $1.5-billion more in cost savings and productivity gains for the balance of this year and next. It added about $150-million to interim earnings by taking over the marketing of its own minerals.
It has already put platinum mines in SA‚ copper mines in Chile as well as coal mines in SA and Australia on the block‚ with the copper disposal process the most advanced‚ he said.
Its subsidiary‚ Anglo American Platinum‚ is battling to exit its Rustenburg and Union mines‚ postponing a decision last month to sell or list the mines.
“Anglo has had limited success in divesting noncore assets in platinum‚ copper and coal so far‚ but management has indicated that more asset sales are imminent‚” global investment bank Jefferies said on Friday.
“Proceeds from the sale of low-margin assets would be helpful‚ even if done at suboptimal prices. Based on our analysis‚ balance sheet is more important than profit and loss in this environment of weakening commodity prices‚ it said.
The asset disposals will go on even if Anglo achieves the $3-billion target it has set for the disposals‚ Cutifani said. “If we go above the $3-billion threshold it would be well and good. We’d redeploy the capital to other longer-life‚ core assets‚” he said‚ adding: “I’m not out there looking at anything from the merger and acquisition perspective.”
This month Anglo completed the sale of its 50% stake in Lafarge Tarmac for $1.6-billion‚ taking it over the halfway mark of its $3-billion target and‚ critically‚ bringing its net debt to $11.9-billion‚ below the $12-billion mark and giving the board further reason to maintain its interim dividend at a steady $0.32 a share.
Anglo had widely been expected to withhold its dividend to shore up its debt-heavy balance sheet. It paid shareholders a total of $1.1-billion last year and a number of analysts argued it would be better served by not repeating the exercise this year.
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