South32 will cut 270 back office jobs in Australia, Singapore, and South Africa in an effort to cut costs during low share prices.
Around 150 of the cuts will be in Australia – the majority in Perth – with CEO Graham Kerr adding that the company’s 144 existing vacant positions will not be filled, according to PerthNow.
This comes in the wake of South32’s first anniversary of operations, with Kerr addressing the Melbourne Mining Club yesterday on its achievements during its brief history.
The company was listed in May 2015 after a demerger from BHP Billiton; taking on the company’s unwanted assets in the form of its Illawarra and South African coal mines as well as manganese, nickel, lead, zinc and silver operations. This left BHP to focus on its five pillars of iron ore, coal, copper, oil, and potash.
Kerr said it was “one of the most complex demergers in mining history”.
“In theory, it sounds pretty straight-forward, but in reality, it amounted to 22 months of hard work, involving more than fifteen hundred people; thousands of process steps; and more than 65 government and regulatory approvals, across six countries,” he said.
Kerr also talked about the company’s name, saying it came from one of their employees, who suggested the use the line of latitude, the 32nd parallel south, to join all employees and regions together, as all business located below this line.
Kerr addressed the company’s restructuring of operations, saying they have adopted a new method, the Regional Operating Model, of working to de-layer their business and “right-size” their systems and processed.
“We are proud of where we came from, but most of the systems and processes inherited from a large multi-national were not going to be fit-for-purpose, for a mid-tier miner. So we kept those that were right for us and then we built our own,” he said.
The company has had a turbulent year since listing, with falling share prices resulting in a major restructuring that plans to cut more than 800 positions from its Australian workforce.
“In just 12 months, we’ve radically restructured our operations to reset the cost base and we’re on track to achieve controllable cost savings of $US300 million this financial year,” Kerr said.
He went on to say they plan to reduce capital expenditure by US$218 million in the 2016 financial year.
“The reality is, prices have been worse than our low-case scenario ever envisaged. Yet, we have reduced net debt by US$692 million. We are now in a position of net cash and we’ve maintained our credit rating.”
Despite the share prices, Kerr was optimistic of about the future of South32.
“We’re making progress to take South32 from good, to great, to outstanding. We are working smarter and focused on growing cash flow per share – without compromising safety. We will come through this difficult price environment a stronger company.”