Global mining giant Anglo American has announced a radical restructuring program which will see the company shed around 85,000 of its employees.
Anglo American Chief Executive Mark Cutifani said that the ongoing commodity price slump prompted the company to take the action and to focus on assets that are well positioned to deliver free cash flow and greater returns.
“Together with the additional material capital, cost saving and productivity measures announced today, we are setting out an accelerated and more aggressive strategic restructuring of the portfolio to focus it around our ‘Priority 1’ assets, being those assets that are best placed to deliver free cash flow through the cycle and that constitute the core long term value proposition of Anglo American,” said the company’s Chief Executive, Mr Mark Cutifani.
“While we have continued to deliver our business restructuring and performance objectives across the board, the severity of commodity price deterioration requires bolder action. We will set out the detail of the future portfolio in February, with the aim of delivering a resilient Anglo American and a step change in the transformation of the Company.”
He said the company was planning a massive reduction of its capital expenditure by consolidating from six to three businesses and suspending dividend payments for the second half of 2015 and 2016.
“As a next step and as we determine the future portfolio, we will be consolidating our six business unit structures into three – De Beers, Industrial Metals and Bulk Commodities – providing further opportunity to reduce the cost burden on our business. 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. 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,” Mr Cutifani added.
“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.”