19.9 C
New York
Tuesday, May 24, 2022

Miners Anglo American, Lonmin take axe to jobs

Mining groups Anglo American (LSE: AAL.L – news) and Lonmin (LSE: LMI.L – news) on Friday announced plans to cut their headcounts by a combined 12,000 staff owing to falling metals prices in a weak global economy.

Anglo chief executive Mark Cutifani said the company, pressured by a drop in iron ore prices, is targeting cost savings of $ 500 million (456 million euros) — $ 300 million of which will be realised “through the reduction of 6,000 overhead and other indirect roles” — including 2,000 staff transferring to sold businesses.

Lonmin, the world’s third largest platinum producer, meanwhile said it would cut 6,000 jobs in South Africa owing to falling prices and high costs, dealing another blow to the country’s fragile economy.

Shares (Frankfurt: DI6.F – news) in Anglo American were down 2.0 percent and Lonmin plunged 14.0 percent in Friday trading following the announcements.

“The job cuts by Anglo American and Lonmin are directly linked with the commodity prices,” said Andrius Balsys, analyst at research group Euromonitor.

“As Anglo American mostly produces iron ore, copper and coal, up to a 68-percent decline in global iron ore price from 2011 and 37-percent decline in global copper prices definitely forces the company to take some action.

“Meanwhile, Lonmin is engaged in production of platinum metal groups in South Africa and a plunge of almost 50 percent in platinum price encourages the company to enact costs saving policy,” Balsys told AFP.

Separately Friday, Anglo American said it had suffered net losses of $ 3.015 billion in the first half of 2015, compared with a gain after tax of $ 1.464 billion one year earlier.

“The first six months of 2015 saw considerable further price decreases for our products amidst a volatile market environment and economic uncertainty in certain key markets,” said Cutifani.

“Having defined our portfolio and significantly improved operational performance, now is the right time to accelerate the right-sizing of the organisation that supports the future business,” he added.

The British-South African firm has meanwhile made a string of costly writedowns on the value of its Brazilian Minas-Rio iron ore project.

It recorded a writedown of $ 3.5 billion owing to weak mineral prices, including $ 2.9 billion on its Minas-Rio operations, and $ 600 million mostly linked to its coal mining in Australia and Canada.

Lonmin said it was cutting about one-sixth of staff “so that it will be able to sustain a viable operation”.

It added in a statement: “A total of 6,000 employees including contractors are likely to be affected by (shaft) closures… It is our intention to achieve this outcome in partnership with our employees, unions and other relevant stakeholders.”

– ‘Bloodbath of job losses’ –

Lonmin, which owns the Marikana mine in South Africa where 34 workers were shot dead by police during a wildcat strike in 2012, is set to face a fierce battle with unions over the job cuts.

“This is a bloodbath of job losses in the mining industry. It is a tragedy,” the National Union of Mineworkers said in a statement.

“We are going to fight against any job losses. It is very painful to see.”

South Africa produces 70 percent of the world’s platinum, and has been badly hit as prices have dropped 14 percent since May, and 45 percent since the start of 2011.

On commodity markets this week, gold slumped to multi-year low points, hit by a stronger dollar and weak Chinese demand.

Related Articles

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Stay Connected

11,301FansLike
12,893FollowersFollow
751FollowersFollow
- Advertisement -

Latest Articles

Popular Articles