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."
Vale invests $150mn to extend life of Manitoba operations
Vale has announced a $150mn CAD investment to extend current mining activities in Thompson, Manitoba by 10 years while aggressive exploration drilling of known orebodies holds the promise of mining well past 2040.
Global energy transition is boosting the market for nickel
The Thompson Mine Expansion is a two-phase project. The announcement represents Phase 1 and includes critical infrastructure such as new ventilation raises and fans, increased backfill capacity and additional power distribution. The changes are forecast to improve current production by 30%.
“This is the largest single investment we have made in our Thompson operations in the past two decades,” said Mark Travers, Executive Vice-President for Base Metals with Vale. “It is significant news for our employees, for the Thompson community and for the Province of Manitoba.
“The global movement to electric vehicles, renewable energies and carbon reduction has shone a welcome spotlight on nickel – positioning the metal we mine as a key contributor to a greener future and boosting world demand. We are proud that Thompson can be part of that future and part of the low carbon solution.”
Vale continues drilling program at Manitoba
Coupled with today’s announcement, Vale is continuing an extensive drilling program to further define known orebodies and search for new mineralization.
“This $150mn investment is just one part of our ambitious Thompson turnaround story. It is an indicator of our confidence in a long future for the Thompson operations,” added Dino Otranto, Chief Operating Officer for Vale’s North Atlantic Base Metals operations.
“Active collaboration between our design team, technical services, USW Local 6166, and our entire Thompson workforce has delivered a safe, efficient and fit-for-purpose plan that will enable us to extract the Thompson nickel resources for many years to come.”
The Thompson orebody was first discovered in 1956 by Vale (then known as Inco) following the adoption of new exploration technology and the largest exploration program to-date in the company’s history. Mining of the Thompson orebody began in 1961.
“We see the lighting of a path forward to a sustainable and prosperous future for Vale Base Metals in Manitoba,” said Gary Annett, General Manager of Vale’s Manitoba Operations.