24 July 2015
- From the section Business
Mining companies Anglo American and Lonmin are cutting tens of thousands of jobs as commodity prices fall.
Anglo said it would cut 6,000 posts from office and other roles not directly related to production.
The company, which has some 150,000 workers worldwide, said employee numbers would fall by 35% after the cuts, which will be accompanied by asset sales.
Anglo posted a pre-tax loss of $1.9bn (£1.2bn) for the six months to 30 June.
The miner has been hit by multibillion-dollar write downs on the values of its assets following commodity price falls.
Iron ore was down 41%, platinum has fallen 19%, and copper is 18% lower.
Chief executive Mark Cutifani told analysts: “Quite frankly we didn’t expect the commodity price rout to be so dramatic and in all likelihood the next six months are going to be even tougher. We have pulled costs out of the business but we need to do more because prices continue to deteriorate.”
Most of Anglo’s workforce is in South America and South Africa, with just 2,000 in Europe.
Profits from its De Beers diamond mining business fell by $189m to $576m.
Shares fell 2.8% to 783.6p, valuing the company at £11bn. The stock is half the value of a year ago.
Meanwhile, Lonmin said it would cut 6,000 jobs as the fall in the platinum price forced it to scale back operations in South Africa.
In a quarterly production statement the miner warned it was heading for an annual loss at current platinum prices.
The price of platinum has fallen by 14.4% from $1,126 an ounce in March to $964 on Wednesday.
Shares plunged by almost a fifth to 61.7p. The stock traded at more than £10 a decade ago.
Lonmin said it would mothball several platinum mines to cut costs, which would create a “smaller more sustainable and agile business”.
The miner added it expected normal platinum production over the next two financial years to fall by 100,000 ounces.
“Our objective is to save the majority of the positions in the company and create a sustainable business by taking urgent action and maximising liquidity to protect the business.
“All costs, not just labour costs, have to be reduced and productivity improved if the business is to be sustainable,” Lonmin added.
The miner added it was reviewing the capital structure for the company given the “new pricing environment” and was considering the whether to refinance its debt.
Platinum sales for the quarter were 231,778 ounces. That was in line with refined production expectations and compared with sales of 206,039 ounces for the same period a year earlier.
But Lonmin said despite the increase in production the weaker price of the precious metal and the weakness of the South African rand had continued to hurt profits.
The platinum US dollar price decreased by 23.2% the same period a year earlier.
South Africa’s National Union of Mineworkers (NUM) said on Friday it was shocked by the decision to cut so many jobs.
“As the NUM, we are going to fight against any job losses. It is very painful to see that these mining companies take the decisions of cutting jobs easy,” the union said.
The mine closures come three years after 34 people were killed after police opened fire on striking Lonmin miners in what has become known in the country as the “Marikana massacre”.
The Lonmin-owned platinum mine became the centre of a violent clashes between police and strikers following a pay dispute with Lonmin that was exacerbated by tensions between two rival trade unions.