Anglo American’s deep cuts hurt

Anglo American will sell more assets, suspend dividends until the end of 2016 and whittle down its business divisions to three from six. As Hayley Platt it’s the mining company’s response to severe commodity price falls.

(REUTERS/ANGLO AMERICAN) – It was already planning $3 billion of cuts.

Now Anglo American has upped it to 4 billion.

The mining giant wants to slash its assets by 60 percent and turn six businesses into three – De Beers, Industrial Metals and Bulk Commodities.

The workforce will be reduced by 85,000 to just 50,000.

And dividends will be suspended until the end of 2016.

Despite the current commodity price problems it came as a shock.

Shares plunged more than 9 percent – they’ve fallen 70 percent so far this year.

Jeremy Batstone-Carr is from Charles Stanley.

CHARLES STANLEY, DIRECTOR OF PRIVATE CLIENT RESEARCH, JEREMY BATSTONE-CARR,

“Although there is this restructuring and the businesses will be sold off and funds raised as a result of that. No additional capacity is being taken out of the industry. You can sell off parts of the business to a potential buyer but it’s really only going to be when the supply/demand disequilibrium is addressed that we will see a sea change in the outlook for the commodity complex.”

Anglo American is the fifith-biggest diversified global mining group by market value.

But it’s been grappling with sliding prices for iron ore, platinum and diamonds.

CHARLES STANLEY, DIRECTOR OF PRIVATE CLIENT RESEARCH, JEREMY BATSTONE-CARR,

“I think a lot of eyes will be on the outlook for the emerging economies, on the outlook for the Chinese economy, on the outlook for the US dollar being very strong of course.”

Details of the firm’s future portfolio will be set out in February.

Another wait for investors already concerned about the slow pace of turnaround.