Anglo American has announced a “radical restructuring program” as it plans to cut 85,000 jobs globally and sell off assets.
This massive shift will see the miner shrink its workforce by almost two thirds, from a 135,000 employee business down to less than 50,000 workers globally, according to CEO Mark Cutifani.
It will also divest or close a number of assets, having pegged some of its Australian thermal coal operations for disposal.
However, it did list Grosvenor, Grasstree, and Moranbah as key assets.
“The global market for commodities continues to deteriorate and this is not the time to talk business as usual,” Cutifani outlined in his presentation.
“We are embarking on a fundamental restricting plan to create a streamlined and tighter portfolio – 2016 [is] a year of radical change.”
The company will consolidate or close a number of its assets as it focuses on what it terms ‘priority 1’ assets, cutting the overall number of assets by 60 per cent and consolidating from six separate businesses into three – De Beers, Industrial Metals, and Bulk Commodities.
When it comes to coal, Anglo will focus only on “low cost operations producing premium quality products”, with plans to shut or place in care and maintenance underperforming operations.
As part of this shift Anglo American’s offices will also co-locate with De Beers in 2017.
The job cuts will be carried out over a period of three years
“Our work to drive out costs and increase productivity will have delivered $1.6 billion of benefit by the end of 2015, following our volume reductions in De Beers and Kumba,” Cutifani stated.
“By the end of 2017, we expect to have delivered a total of $3.7 billion of such efficiency improvements, made up of productivity, operating costs and indirect costs.
“We are taking further steps to protect the balance sheet and reduce leverage. We are reducing 2015 and 2016 capex by an additional US$1 billion and have reduced our 2017 capex to US$2.5 billion, a 55% reduction versus our 2014 expenditure.
“SIB and capitalised stripping capex is also reduced substantially to reflect the prioritised allocation of capital, while ensuring the ongoing integrity of our assets. We are increasing our targeted disposal proceeds to $4 billion and will be progressing the sale process for the Phosphates and Niobium businesses during 2016. The Board has also taken the decision to suspend dividend payments in respect of the balance of 2015 and 2016. Upon their resumption, the dividend policy will reflect a pay-out ratio to provide flexibility through the cycle and clarity for shareholders.”