Globally, the company will slash 85,000 jobs, get rid of its dividend and seek to hive off unprofitable assets as part of a restructure designed to shore up its balance sheet in the current mining downturn.
Anglo American CEO Mark Cutifani said: “As we redefine our operational footprint, we are aligning our organisation to ensure optimal efficiency and effectiveness.
“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.”
Cutifani said that, together with additional material capital, cost saving and productivity measures, Anglo is 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.
“While we have continued to deliver our business restructuring and performance objectives across the board, the severity of commodity price deterioration requires bolder action,” he said.
“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.
“We are taking further steps to protect the balance sheet and reduce leverage. We are reducing 2015 and 2016 capex by an additional $1 billion and have reduced our 2017 capex to $2.5 billion, a 55% reduction versus our 2014 expenditure.
“SIB and capitalised stripping capex is also reduced substantially to reflect the prioritised allocation of capital, while ensuring the ongoing integrity of our assets.
“We are increasing our targeted disposal proceeds to $4 billion and will be progressing the sale process for the Phosphates and Niobium businesses during 2016.”
The company has also taken the decision to suspend dividend payments in respect of the balance of 2015 and 2016.
