Source: Anglo American to cut up to 20 percent of staff
Tough times call for tough decisions and Anglo American is prepared to do just that. The global mining company is reportedly planning to cut between five and 20 percent of its staff at head offices around the world.
According to unidentified sources quoted by Reuters, the move is intended to appease shareholders and respond to weak commodity prices which have taken a massive toll on Anglo’s profits.
"I can confirm that at group level there are major job cuts brewing," one source close to the company said.
A second source said: "They are considering a headcount cut of about 20 percent at group level and further restructuring through all divisions."
Anglo American, which currently employs approximately 151,200 staff globally, is expected to announce the job cuts later this month when it publishes its first-half results.
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CEO Mark Cutifani has been looking to improve operational performance as well as its balance sheet for the past year, including putting an array of assets up for sale. Coincided with falls in commodity prices, many investors are starting to lose patience.
"It's clearly a critical juncture for Anglo American. The interim results are going to be important for us to make the call on our Anglo investment, as well as investment in the broader sector," said Investec fund manager Hanre Rossouw, a shareholder in Anglo American and in its subsidiary Amplats.
"Mark has correctly focused on improving operational performance as this has been lagging. He now needs to address more strategic matters including the group structure and the sustainability of the balance sheet and dividend, certainly some uncomfortable decisions that need to be taken soon."
For many of Anglo American’s investors, a sense of urgency seems to be lacking from the group.
“More of that would be desirable,” said Ian Woodley, portfolio manager at Old Mutual, a shareholder in Anglo American and Amplats. “You can't hang on to something forever when everybody knows it's an unwanted asset. They are quite good at promises. Delivery tends to be slower than you would be happy with.”
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News of the potential job cuts is creating buzz that Anglo could be susceptible to a takeover bid by Swiss-based Glencore.
"I think Glencore always believed they have got a free pass to takeover Anglo. If the equity falls another 15-20 percent it becomes compelling for anyone who has got a bit of a balance sheet and wants to take a longer term view to take it over and break it up," Bernstein Research analyst Paul Gait said.
"If they really want to put up a defense against Glencore they have to take more radical solutions."
Gerald Group resolves iron ore dispute with Sierra Leone
Gerald Group, the US commodity trader, will pay Sierra Leone $20mn and cede a 10% stake in an iron ore project as part of the resolution to a nearly two-year dispute that led to the shutdown of production, the two sides revealed.
Gerald's wholly-owned subsidiary SL Mining filed for arbitration in August 2019 over a royalty payment dispute and suspended the Marampa mine the following month. Sierra Leone's government responded by cancelling its mining licence.
As part of the agreement signed on Friday, Sierra Leone will take a non-dilutable 10% stake in a new company that will replace SL Mining and resume operations at Marampa by June 1, Gerald said in a statement.
Gerald will make two $10mn payments this year and will have the immediate right to ship its current stockpile of about 707,000 tonnes of iron ore, it said.
Both sides will withdraw their legal claims before the International Chamber of Commerce (ICC) and International Centre for Settlement of Investment Disputes (ICSID), the statement added.
Gerald’s chairman and CEO Craig Dean commented: "I am delighted that we have been able to resolve our differences and have a fresh start and new beginning with the government of Sierra Leone."
Sierra Leone's Mines Minister Timothy Kabba told a news conference on Tuesday that the agreement was a milestone for the country.
"Whatever the pain we may have borne or dreaded throughout these two years ... this outcome justifies our action," he said.
Gerald estimates that Marampa holds about 1 billion tonnes of iron ore with a potential lifespan of 30 years.
Back in 2019, Dean spoke with Mining about the development of Marampa and commented: "SL Mining offers a substantial opportunity for Gerald Group as our Marampa mine in Sierra Leone is producing two million tonnes per annum of high grade iron ore in the first phase of development, with expansion possibilities of greater than six million tonnes per annum of high-grade iron ore during its operational life. If you analyse the iron ore market it has transformed, even from a couple of years ago when prices were very low. Now prices have stabilised we’re in a favourable position with our first shipments leaving for China.
"Our goal is to make ‘Marampa Blue’ an internationally recognised premium grade iron ore brand. We intend to expand the delivery of high-grade 65% iron ore concentrate to markets in Europe and Africa.”