Anglo American restructure, cut jobs, sell phosphate business

Anglo American to restructure, cut jobs, sell phosphate business

9:21 AM, 10th December 2015
Anglo American to restructure, cut jobs, sell phosphate business

LONDON, UK: Anglo American Plc, a multinational mining company said that due to its low shares record the company would sell huge chunks of its business and shrink its workforce by nearly two-thirds and has a radical restructuring plan to transform the company and improve its competitive position.

The changes will see the workforce drop by 85,000 to 50,000 from the total workforce of 135,000.

The group has been forced to restructure after the collapse of commodity prices slashed profits. It will also suspend dividend payments for a year and consolidate from six to three businesses.

All the world’s big mining companies have seen profits tumble along with plunging commodity prices as demand from China has slowed.

As part of the restructuring, Anglo American’s diamonds business will be run by its De Beers subsidiary, its platinum and base metals operations will come under Industrial Metals and its Bulk Commodities division will concentrate on coal and iron ore.

“The job cuts would be made through asset sales and internal cuts: “Bear in mind that these include assets that we will sell, so the 85,000 jobs don’t [all] disappear as many will be employed by new owners of those mines that we sell,” company spokesperson said.

Anglo will sell its phosphates and niobium businesses during 2016 and plans $3.7billion in cost and productivity improvements by 2017.

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

Anglo’s share price has fallen by more than two-thirds over the past year. Shares in other major mining companies also saw sharp falls in trading in London. Glencore was down 9.3 percent, Rio Tinto fell 6.3 percent and BHP Billiton was 5.8 percent lower.

“Anglo American, like all of its counterparties in the mining sector, has found there is no more fat to be cut and it had to face the reality that it could no longer pay out the dividend,” said Alastair McCaig, market analyst at IG.

Where one goes, others will follow and the possibility that BHP Billiton or Rio Tinto might be forced into similar action now looks increasingly likely.

© BBC News



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