Among the changes rung in during an investor day on Tuesday morning were a 60% reduction in the number of assets owned by the group to around 20, $2.1bn of cost improvements delivered in 2016 and 2017 and a dramatic reduction in employee and contractor numbers from the 135,000 expected at year-end, 2015, to around 92,000 in 2017 and around 50,000 by the end of the various restructuring plans proposed.
As Mark Cutifani, Anglo American CEO, explained it, the plan was to set out an “accelerated and more aggressive” restructuring plan that would enable the firm to focus on assets it believes are best placed to deliver free cash flow through the cycle.
“While we have continued to deliver our business restructuring and performance objectives across the board, the severity of commodity price deterioration requires bolder action. We will set out the detail of the future portfolio in February, with the aim of delivering a resilient Anglo American and a step change in the transformation of the Company”.
This is not the first time that the firm has announced a major restructuring, nor the first time it has scrapped its dividend, although it is only the second time it has done so in almost 100 years of operation – the first time being in 2009. Indeed, it is also not the first time that Cutifani has called for a major overhaul of the business.
Speaking at the group’s annual general meeting in 2013, his first speech as the firm’s CEO, after having been brought in to replace Cynthia Carrol and right size a business that was lagging its peers and struggling to weather the financial crisis, he said: ““To be brutally frank, our industry lags the petroleum, manufacturing and aviation sectors and other more progressive and innovative heavy industry players in terms of operating practices – there is no reason why our industry should not use the best from all of these ‘restless innovators’.”
He added: ”Over the last five years, the sector has been guilty of “a lack of capital discipline, a lack of focus on returns and incapacity to translate good intent into business results.”
