Mining Sector in Turmoil as Anglo American Sheds 85,000 Jobs

Author: Associated Press

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LONDON — The decision by a London-based mining company to shed 85,000 jobs is the sign of a global industry in crisis, with conglomerates reassessing their huge operations to cope with a drop in demand from Chinese factories for metals and other raw materials.

Anglo American said Tuesday it will shed some 63 percent of its workforce in a radical restructuring meant to cope with tumbling commodity prices. It will streamline its global business from some 55 mines to around 20.

CEO Mark Cutifani said the drop in commodity prices requires "bolder action," even though the company has delivered on performance and previous business restructuring objectives. He pledged to provide more details later.

The dividend was suspended for the second half of 2015 and 2016. Investors reacted with dismay. The company's share price fell 11 percent to 327.30 pence.

Mining companies around the world are facing tough times as economic growth slows in China, whose manufacturers' need for raw materials has driven a years-long boom in mining in countries like Australia and Brazil.

China accounts for as much as 40 percent to 50 percent of global commodity demand, according to consultants PwC. Its economic growth is forecast to drop below 7 percent a year from double digits in recent years — and commodity prices are tracking it lower.

"Mining companies are feeling the wrath of the collapse in commodity prices," said Gianna Bern, who teaches finance at the University of Notre Dame in Indiana and expects others across the industry to also either cut or suspend their dividends to cope. "Companies are weathering some very tough economic times."

Read the entire story on the New York Times website.