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Anglo American to cut 35 percent of global workforce amid massive writedown

Anglo American is facing a steep uphill battle in 2015 and beyond as the mining company reported a $3 billion loss for the first half of the year. The n...

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|Jul 28|magazine8 min read

Anglo American is facing a steep uphill battle in 2015 and beyond as the mining company reported a $3 billion loss for the first half of the year. The news will force the global miner to cut 53,000 jobs from its workforce, including 6,000 office jobs, as well as sell upwards of 15 assets.

“The first six months of 2015 saw considerable price decreases for our products amidst a volatile market environment and economic uncertainty in certain key markets,” said Anglo American CEO Mark Cutifani.

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The miner reported a half-year profit before tax of $1.9 billion, 36 percent less than in the same period last year. Plunging commodity prices, including a one-time charge of $3.5 billion and $2.9 billion from a write-down on the value of Anglo’s Minas-Rio iron ore project in Brazil, have caused havoc among the mining firm.

Anglo American has used sales and closures to cut its portfolio from 68 mines to 55 mines within the past 18 months. It plans to further reduce its assets to 40, helping to generate at least $3 billion in proceeds from the sales.

“We will deliver on the $3 billion. Where we ultimately get it will depend on the market and the opportunities at the time,” Mr Cutifani said. “We will not sell high quality assets or assets we consider to be core to the business to cover the dividend . . . We would not look at cutting into the core of the business.”

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Anglo American is also expected to cut capital expenditure, targeting an additional reduction of $1 billion by the end of 2016.

"We have cut production and closed mines in coal in Canada and Australia in particular. We’ve shut three platinum shafts, cutting 24 percent of our own mine production and we’ve pulled back production guidance in diamonds,” said Cutifani.

"We are responding to the market and making the changes, unlike some who talk about it but don’t do that much."

In addition to job cuts and asset sales, Anglo is set to move out of its fancy headquarters in central London in an effort to save money.

“We are downsizing, we think it is appropriate . . . St James is a very expensive place to reside if you are mining company,” Mr Cutifani said.

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