By Scott Patterson
The world's biggest miners are hemorrhaging jobs as the price
for almost everything they dig up--from gold to aluminum to
copper--slides relentlessly downward.
Anglo American PLC, the U.K. mining titan, on Friday announced
the most dramatic job-reduction figure yet in the ailing industry,
saying it would slash 53,000 jobs over the next several years--
including 6,000 in the corporate offices amounting to $500 million
in savings. That would amount to a reduction of 35% of its current
workforce of 151,000.
"We're looking at every dollar and pulling everything back,"
Anglo-American Chief Executive Mark Cutifani said in a presentation
of the miner's first-half earnings results to investors Friday.
"It's a constant process driving out costs."
Also on Friday, South Africa's Lonmin PLC said it would cut
6,000 workers over the next two years. BHP Billiton has recently
cut hundreds of jobs linked to its giant copper, gold and uranium
mine, Olympic Dam, in South Australia so far this year. Fortescue
Metals Group Ltd., the world's fourth largest iron-ore exporter, on
Thursday didn't rule out further job cuts as it said it intends to
cut costs in the year ahead by nearly the same amount it slashed in
the two past fiscal years combined.
Tens of thousands of jobs are estimated to be have been cut
across Australia, from the coal fields of Queensland state to the
goldfields of the country's west, over the past couple of
years.
Staff cuts are among the measures miners are taking to lower
their costs amid a historic downturn in commodity prices driven by
China's abrupt economic slowdown. Anglo and other big miners such
as Rio Tinto PLC have also moved to restructure organizations that
had grown quickly when China was gobbling up commodities. Anglo is
trying to sell more than a quarter of its assets, while BHP
recently spun off more than a dozen mines into a separate, public
company called South32.
The moves come as oil companies and their service contractors--
roiled by a similar price collapse in the crude market--shed tens
of thousands of jobs and are moving to reshape their operations for
what could be a long period of lowered commodity prices.
The market for what the big miners sell continued to fall on
Friday. Three-month copper futures fell to $5,202.50, their lowest
level in six years, as a preliminary gauge China's manufacturing
activity dropped to a 15-month low in July. Prices of three-month
aluminum, another heavily-traded base metal, also dropped to a
six-year low at $1,634 per ton.
Anglo's financial results were hit across all of the commodities
it sells, but particularly in iron ore. The price for that key
ingredient in steelmaking fell below $50 a ton this year, down from
highs of $190 a ton in 2011.
Overall, the company reported a $3 billion loss for the first
half, including a one-time $2.9 billion from a write-down in the
value of Anglo American's huge Minas-Rio iron-ore project in
Brazil.
Experts, including Glencore PLC Chief Executive Ivan Glasenberg,
have argued that much of the decline in commodity prices has been
driven by overproduction as mining operations launched several
years ago during the so-called "supercycle," driven by Chinese
demand, come into production.
Jefferies analyst Christopher LaFemina said in a note this week
that the "second meltdown phase" for miners, driven by
ever-worsening demand, has recently begun.
"Prices for industrial commodities are unlikely to recover until
demand improves," he wrote.
None of the big diversified miners has suffered as much as
Anglo, which Mr. Cutifani took over in 2013 with high hopes of
turning it around. Instead, the company's profits have fallen
further. Its share price has hovered at or near 13-year lows in
recent weeks.
The job cuts are among the most drastic measures he has
announced, as he looks to make the world's fifth-largest miner by
market valuation more efficient. They will bring the miners' total
workforce down to about 98,000 people, though some of that is
dependent on Mr. Cutifani's ability to sell some mines--something
he has had trouble doing.
Write to Scott Patterson at scott.patterson@wsj.com
Rhiannon Hoyle in Sydney contributed to this article.
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