Anglo American aims to cut about 60,000 jobs by 2017
The company said by 2017 a programme of divestments would leave it with around 102,000 employees.
JOHANNESBURG - Global miner Anglo American said on Tuesday it aimed to slim down its workforce and warned of a delay in reaching a key return on capital target due to weaker metal prices, putting its long-term revamp strategy in doubt.
The company said by 2017 a programme of divestments and productivity improvements would leave it with around 102,000 employees and contractors, some 60,000 less than in 2013.
After years lagging its peers, Anglo American's boss Mark Cutifani has vowed to revamp the business by slashing costs, improving mine operations and selling underperforming assets.
A key target set by Cutifani was to boost return on capital employed (ROCE), a measure of the value a company gets from its assets, to at least 15 percent by 2016, from 11 percent last year. But a steep fall in commodity prices and expectations that price weakness will persist, are frustrating its plans.
Anglo said that taking into account market consensus on prices for 2016, the company will only be able to achieve ROCE of 12 percent in 2016.
"There is certainly no doubt that we don't want to pull any punches," Cutifani said in a meeting with investors. "Prices are what they are. Our job is to adapt and continue to improve."
He added the company was trying hard to identify additional earnings to meet its 15 percent target on time.
"They are making progress, but it's one of those cases where they are working very hard just to stand still given current metals prices," said Macquarie analyst Jeff Largey.
Most metal prices have tumbled since last year. Iron ore, a top earner for Anglo American, has lost almost half of its value this year, due to excess supply and slower economic growth in China, the largest importer of the commodity.
Norman Mbazima, the chief executive of Anglo's iron ore subsidiary, Kumba, said he planned to slash costs and cut 40 percent of jobs at its Pretoria head office in South Africa, as softer prices for the steel-making ingredient took their toll.
Cutifani also said he aimed to cut over a third of total jobs at Anglo by 2017, compared with 2013, mostly through productivity improvements and disposals of the most labour-intensive assets such its oldest platinum mines.
Chief Financial Officer Rene Medori said Anglo was considering write downs on the value of its Brazilian iron ore project Minas Rio and its metallurgical coal assets due to falling prices, although he declined to put a number on the potential impairment.
Anglo American Platinum said the sale of its Union mine was underway and added it will decide in February whether to sell its Rustenburg mines or list them.
On coal, Anglo said it has put up for sale its Callide and Dartbrook assets in Australia and was also considering divesting some coal assets in South Africa.