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Sancho Panza

Anglo American To Cut Workforce By 85,000 In Restructuring

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BBC 8/12/15

'Shares in mining firm Anglo American have fallen by more than 10% as the company said it would sell huge chunks of its business and shrink its workforce by nearly two-thirds.

The changes will see the workforce drop by 85,000, from 135,000 to 50,000.

The group has been forced to restructure after the collapse of commodity prices slashed profits.

Anglo will also suspend dividend payments for a year, and consolidate from six to three businesses.

All the world's big mining companies have seen profits tumble along with plunging commodity prices as demand from China has slowed.

The price of oil is at seven-year lows, as is copper, and on Tuesday the price of iron ore tumbled to a 10-year low of $39.60 a tonne, after reaching a peak near $200 in 2011.

'Bold'

As part of the restructuring, Anglo American's diamonds business will be run by its De Beers subsidiary, its platinum and base metals operations will come under Industrial Metals, and its Bulk Commodities division will concentrate on coal and iron ore.

A company spokesperson said the job cuts would be made through asset sales and internal cuts: "Bear in mind that these include assets that we will sell, so the 85,000 jobs don't [all] disappear as many will be employed by new owners of those mines that we sell."

Anglo will sell its phosphates and niobium businesses during 2016 and plans $3.7bn in cost and productivity improvements by 2017.

Chief executive Mark Cutifani said: "While we have continued to deliver our business restructuring and performance objectives across the board, the severity of commodity price deterioration requires bolder action."

Anglo's share price has fallen by more than two-thirds over the past year.

Shares in other major mining companies also saw sharp falls in trading in London on Tuesday. Glencore was down 9.3%, Rio Tinto fell 6.3% and BHP Billiton was 5.8% lower.

"Anglo American, like all of its counterparties in the mining sector, has found there is no more fat to be cut and, as had been speculated for the last week, it had to face the reality that it could no longer pay out the dividend," said Alastair McCaig, market analyst at IG.

"Where one goes, others will follow and the possibility that BHP Billiton or Rio Tinto might be forced into similar action now looks increasingly likely."'

Worth checking out the 30 year copper chart for the upturn in 2003

http://www.indexmundi.com/commodities/?commodity=copper&months=360

Edited by Sancho Panza

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This will be the recovery then

The one that will lead the Aussie housing market to new highs.The knock on effect on manufacturing in places like Oz,could be substantial.Reading the Aus faces it's demons thread

there are some places where mine closures have led to 70% drops in house prices,although if you can't afford to eat/fill your fuel tank,I'm not sure HPI will be your major concern.

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The world economy is looking up then!

Sorry for the people/families who are losing their jobs....especially at this time of year.

But...

Dontcha just love it when the veil of Govt and MSM lies and deceit falls occasionally?

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That's a staggering headcount to be cutting!

That's what I thought.A lot of those will be well paid-by local comparison-as well.

Bloomberg 31/7/15

http://www.bloomberg.com/news/articles/2015-07-31/the-600-million-mine-sold-for-a-dollar-underscores-ruin-of-coal

'The destructive force of a collapse in world coal prices has been underscored by the sale of a mine valued at A$860 million ($631 million) three years ago for just a dollar.

The company plans to restart output at Isaac Plains at a reduced production rate. It sees “significant” synergies with its adjacent Wotonga deposit, only recently acquired and yet to be exploited. It’s also secured a $42 million loan from Taurus Mining Finance Fund to help finance a return to production.'

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Worth checking out the 30 year copper chart for the upturn in 2003

http://www.indexmundi.com/commodities/?commodity=copper&months=360

Looking at that chart you could argue that there is still a long way to fall.

Shot of a massive QE spend from China or the US, focussed on infrastructure such as road, rail, dams, etc, etc, it is hard to see where the demand is going to come from for coal, iron, copper, etc.

The spike in that chart was China massively building out its infrastructure - that has happened now.

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That's a staggering headcount to be cutting!

Apparently most of their workforce is in South Africa and they are heavily unionised and militant allegedly.

The sale of units, according to some posts online, is about getting rid of the workers in a sale of the business rather than having to handle potential redundancy argo.

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Have the 1% run out of cash?

I do a bit of sailing.

They haven't run out of cash. There's a glut of 2nd hand boats now on the market. In all price ranges.

Lots of boomers now starting to retire or have retired and hitting an age (70+) when going out on a boat for the day/weekend isn't high on your list of things to do.

Mooring fees are also v high. 3-6K per year for a medium sized yacht (under 8M) and that's for something that might only be sailed 2-3 wks of the year. Add in insurance, maintenance, petrol etc and that's quite a whack off your pension.

Buying a new boat doesn't make much sense when you can get a good 2nd hand one - under 5 years old - for between 30-70% off new price.

Then there's rentals. On the French Riviera, using websites like Gumtree or Leboncoin (in France) , you can rent a decent sized boat for 100-150€ / day - or under 1000€ / wk. All inclusive. At these prices there's no sense in buying for the occasional "Admiral of the High Seas".

At the very top, all the Oligarchs that have surfaced in the last 10-15 years have their super-sized boats.....and by their definition , there won't be a flurry of new oligarchs rushing to join them ;)

Edited by Agentimmo

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Looking at that chart you could argue that there is still a long way to fall.

Shot of a massive QE spend from China or the US, focussed on infrastructure such as road, rail, dams, etc, etc, it is hard to see where the demand is going to come from for coal, iron, copper, etc.

The spike in that chart was China massively building out its infrastructure - that has happened now.

Quite.You've also got the issue that if the $ rises,a lot of producers will produce more to maintain revenue,service debts etc driving the price down some more.

At which point more marginal producers will go bust and the supply will restrict and the price will find a new level.At which point the survivors will offer excellent value(if they don't already)

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Quite.You've also got the issue that if the $ rises,a lot of producers will produce more to maintain revenue,service debts etc driving the price down some more.

At which point more marginal producers will go bust and the supply will restrict and the price will find a new level.At which point the survivors will offer excellent value(if they don't already)

Yep, apparently BHP and Rio Tinto can still make money at much lower copper and iron prices. They are the Saudis of the base metal industries.

In both the base commodities, oil producers and gold mining there has not been enough comanies going bust yet to sart a clear out. Glencore needed to go bust but it is looking like it owes so much money to so many banks that it cannot be allowed to do so???

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Anglo American's head office is in London (87,000 sq ft) so that's probably a few hundred maybe a couple of thousand employees. So if say 50% are redundent that could impact London house prices to some extent. If it's across the whole mining sector headquartered in London then the effect on London house prices could be significant.

More than 60% of employees redundant world wide suggests that they think the downturn isn't going to be over quickly.

Edited by billybong

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Anglo American's head office is in London (87,000 sq ft) so that's probably a few hundred maybe a couple of thousand employees. So if say 50% are redundent that could impact London house prices to some extent. If it's across the whole mining sector headquartered in London then the effect on London house prices could be significant.

More than 60% of employees redundant world wide suggests that they think the downturn isn't going to be over quickly.

Yep, there was just an advert on the telly in the Countdown commercial break asking us to think of redundant and early retired middle and senior managers this Christmas.

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http://www.theguardian.com/business/2015/dec/14/shell-2800-job-cuts-bg-takeover

Shell to shed further 2,800 jobs after BG takeover

Heard it on the radio a few days ago. Plus 7500 from Shell itself.

The group said: “Shell proposes that office consolidation will be undertaken where practical in certain locations around the world. With regards to office footprint rationalisation in the UK, Shell will, following deal completion, undertake a comprehensive review during the course of 2016.”

Edited by billybong

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I do a bit of sailing.

They haven't run out of cash. There's a glut of 2nd hand boats now on the market. In all price ranges.

I wonder whether this is also being manifested in other 'luxury toy' markets - such as the second hand private/small aircraft market. I was toying with the idea of taking about flying, getting a PPL, etc. But the cost of aircraft is daunting.

Edited by anonguest

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