Anglo to cut staff by nearly two-thirds

Shares in the British mining giant took a beating on Tuesday after the company announced it would cut its workforce by nearly two-thirds, affecting some 85,000 out of its 135,000-strong staff, as part of a desperate attempt to cope with tumbling commodity prices.

"We will be radically restructuring our portfolio, so the net result is expected to be a reduction to around 50,000 employees," a spokesperson told the AFP news agency. Anglo has already cut several thousand jobs in recent year, with its staff standing at 162,000 in 2013.

Weak demand, in particular from the world's second biggest economy, China, has already sapped Anglo's stock price by 70 percent so far this year. Tuesday's announcement shaved off another 12 percent, pushing shares down to a new record low, with investors worrying that the restructuring plan might stop the bleeding temporarily but won't heal the wound in the long run.

Pledging to take "bolder action," CEO Mark Cutifani also said he would whittle down the firm's portfolio from some 55 mines and smelters to around 20, focusing mainly on its diamond, platinum and copper businesses, which offer better long-term potential. Going forward, the company will consist of just three division: De Beers for diamonds, Industrial Metal for platinum and base metals, and Bulk Commodities for coal and iron ore.

"Assets in nickel, coal and iron ore will have to compete and demonstrate their ability to drive down the cost curve, with the ability to deliver cash through the cycle. If not, they won't be in the portfolio, it's as simple as that," Cutifani told investors in the British capital.

'Outlook remains dim'

The comment came on the same day as spot iron ore fell to a decade low of less than $40 (36.7 euros) a ton, while futures prices suggested more weakness for the steelmaking commodity already down by nearly half this year.

"With few exceptions, the commodity price outlook remains dim, forcing miners to keep up their guard," consultants PwC said in a report on Tuesday. "As the old saying goes, survival will be of the fittest, and for miners also the leanest."

To that end, the miner said it planned to sell several coal assets in Australia and South Africa, adding that it had secured more than $2 billion in sales so far. In addition, it would further slash investments through 2016 by about $1 billion.

In a blow to shareholders, Anglo said it would suspend dividend payments until the end of next year in order to save money.

The London-based miner, which is currently the world's fifth-biggest by market value, has been hit harder by the ongoing commodity crisis than many of its rivals, with higher-cost iron ore operations weighing heavier on its bottom line.

By selling off the most costly, it hopes to not only save money, but also to save some of its parting employees' jobs in the process. Commenting on the layoffs, Anglo's spokesperson stressed that because many of the mines will be sold and not closed, "the 85,000 jobs don't (all) disappear as many will be employed by new owners."

According to a company graph, the miner plans to shrink its workforce to 99,000 next year and 92,000 in 2017 followed by another sharp reduction.

pad/uhe (AP, AFP)