Commodity price rout forces Anglo retreat

Mining giant scraps dividend and announces 85,000 global jobs cuts

Nick Goodway
Tuesday 08 December 2015 23:48
Comments
Anglo American is the world’s largest platinum producer
Anglo American is the world’s largest platinum producer

The mining giant Anglo American became the latest victim of the rout in commodity prices, saying it would cut its workforce by 85,000, suspend its dividend and radically restructure the business.

About £635m was wiped off the £5bn value of the London-based company after its shares closed at an all-time low of 323.6 5p – a plunge of 12.29 per cent.

Anglo American’s chief executive, Mark Cutifani, told investors: “The global market for commodities continues to deteriorate and this is not a time to talk about business as usual. The severity of commodity price deterioration requires bolder action.”

He said the business would make further writedowns of up to $4.7bn to reflect lower prices and unprofitable assets that are to be closed.

Mr Cutifani dramatically illustrated his case with a slide showing the fall in commodity prices this year, with nickel down 38 per cent, iron ore down 33 per cent, copper down 29 per cent and even diamonds down 15 per cent.

Anglo’s decision to take the axe to many of its businesses came as the price of oil teetered at six-year lows. Brent crude fell by 30 cents last night to $4o.43 a barrel. Iron prices fell below $40 a tonne for the first time since 2009. Iron ore is now so cheap that, at these levels, it makes some of the world’s biggest mines unprofitable.

Anglo said it expected its current globla workforce headcount of around 135,000 staff to fall to 99,000 by the end of next year, to 92,000 by the end of 2017 and down to 50,000 at an unspecified future date.

Mr Cutifani also outlined $3.7bn of cost savings over three years, an extra $1bn of capital spending cuts and planned sales of assets worth $4bn.

Among many radical decisions, Anglo will vacate its London headquarters – a plush Georgian terrace in the upmarket St James’s disctrict – to move in with its diamond business, De Beers, on the edge of Smithfield market.

The world’s largest platinum producer will consolidate down from six divisions to three by merging coal and iron ore into bulk commodities, while copper, nickel and platinum become a single industrial metals division.

De Beers remains the diamond division, and niobium and phosphates have been put up for sale. Mr Cutifani said there would be no final dividend this year and none at all next year. He added: “Upon their resumption, the dividend policy will reflect a payout ratio to provide flexibility through the cycle and clarity for shareholders.”

The dividend cut is the latest by a large business, with eight FTSE 100 firms slashing or cancelling dividends this year, including Glencore, Antofagasta, Centrica, Standard Chartered, Morrisons and Tesco.

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Please enter a valid email
Please enter a valid email
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Please enter your first name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
Please enter your last name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
You must be over 18 years old to register
You must be over 18 years old to register
Opt-out-policy
You can opt-out at any time by signing in to your account to manage your preferences. Each email has a link to unsubscribe.

By clicking ‘Create my account’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Join our new commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in