Monday 19 March 2018

Anglo American shares plunge on mass lay-offs

The Anglo American logo is seen in Rusternburg
The Anglo American logo is seen in Rusternburg

Thomas Biesheuvel

Anglo American, one of the world's biggest mining companies, is shrinking to a fraction of its former size to cope with the collapse in commodity prices.

The company is selling assets, closing mines and will eventually employ 50,000 people, compared with 135,000 now, chief executive officer Mark Cutifani said yesterday, without giving a time frame.

Anglo also scrapped its dividend for the second half of this year and for 2016. Shares slumped as much as 9.9pc. "Investors are still concerned whether or not Anglo as a business retains the liquidity to continue to grow," Kieron Hodgson, an analyst at Panmure Gordon & Co, said.

Mr Cutifani is seeking to keep the company afloat with metal prices showing no signs of a recovery from the lowest levels in six years.

Years of increased output from miners have created global surpluses just as slower economic growth from China erodes demand.

While there have been some production cuts, the rout has deepened because miners are still supplying more metal than is needed around the world.

After the restructuring, Anglo will be much smaller. It will control 20 to 25 assets split across three divisions of its De Beers diamond unit, industrial metals and bulk commodities, Mr Cutifani said.

The company currently has about 55 assets.

The focus will be on its so-called tier-one assets, which are competitive at low commodity prices. Anglo had previously announced that it would cut its workforce to about 100,000 next year.

The stock fell 8.3pc to 338.40 pence by midday yesterday in London, giving the company a market value of $6.5bn.

The shares are trading near a record low and have plunged 72pc this year, the second-biggest decline in the UK's FTSE 100 Index.

The last time Anglo cut its dividend was in 2009 during the global financial crisis. (Bloomberg)

Irish Independent

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