Anglo to Cut 19,000 Workers in 2009
Anglo said it will initiate a workforcereduction program aimed at cutting 19,000 workers by the end of 2009. According to Anglo American CEO Cynthia Carroll, the reduction in force will be achieved through a combination of natural attrition, scale-back of contractor arrangements and eliminating redundancies. The figure represents about 10% of its managed workforce.
The measure follows similar moves by Rio Tinto, which earlier announced that it planned to lay off 14,000 workers; and BHP Billiton, which said in January that it would lay off 6,000 people among its roughly 41,000 workers and 60,000 contractors, including 2,100 workers at its Australian nickel operations.
Although 2008 was a fairly good year for Anglo American, a breakdown by halves illustrates the impact that a rapid decline in commodity prices had on its mining businesses. Of the $5.2 billion it earned last year, $4.3 billion of that occurred in the first half. Profits were down 29% overall in 2008, mainly as a result of income from its base metals business (down 42%) but also from slumping profit performance in its platinum and industrial minerals operations. On the plus side, its ferrous metals business registered a 135% increase in operating profits, along with coal, where profits were up 265%—record figures for both sectors. The company’s diamond business achieved a 5% increase in profits, attributable mostly to a steady increase in the price of diamonds over the first seven months of 2008.
Carroll noted that the company had made considerable strategic progress during 2008, including the receipt of socalled “new order” mineral rights across its mining businesses in South Africa. It also shed several non-core assets, including the sale of its investment in China Shenhua Energy for $704 million, the sale of Tarmac Iberia for $186 million, and the sale of Namakwa Sands and 26% of both Black Mountain and Gamsberg to Exxaro Resources for a total of $353 million.
“During the year, we also advanced our long term iron ore growth strategy by securing control of the Minas-Rio project and the Amapá iron ore system in Brazil. Minas-Rio has multi-phase expansion potential, the first phase of which is due to begin production in 2012. In recent weeks, we have also reduced our shareholding in AngloGold Ashanti to 11.8%, realizing total proceeds of $434 million,” said Carroll.
Regarding the announced 50% reduction in 2009 capital spending, it was explained that the reduced target figure would be achieved principally by rescheduling capital outlays on many of the company’s major development projects. The $3.2 billion that will be spent in 2009 “will enable their continuing development without incurring undue delays or penalties that may impact their investment cases, balancing necessary short term action in the context of the long term nature of the mining industry. These projects are a key driver of Anglo American’s long term growth and several are timed to enter production from 2011 onward.”.