Global mining company to shed 85000 jobs

Global mining giant Anglo American is getting ready to shed about 85,000 jobs as it sells off 60% of its assets over the next few years.

Anglo's plan includes asset sales, large cost cuts and a suspension of dividend payments in a bid to weather weak commodity markets.

CEO Mark Cutifani says in statement Tuesday that commodity price deterioration requires "bolder action", than described previously.

Earlier Tuesday, Rio Tinto said it planned to slash spending in 2016 by a similar amount to maintain profits in the face of the commodities price rout. The global iron ore exports are predicted to reach 1.6 billion tons next year. "If not, they won't be in the portfolio, it's as simple as that", Cutifani said.

In what could be a game of "dividend dominos", BHP Billiton (BLT) is vulnerable, with market losses of 50 per cent this year, warns Mike van Dulken, head of research at Accendo Markets. The company's net debt guidance at end 2015 was unchanged at $US13 billion-$US13.5 billion.

Anglo's announcement rattled investors.

Other miners suffered as well. The FTSE 350 Mining Index fell 7.1 percent.

Anglo's troubles can be traced to the company's ill-fated expansion into the iron ore industry.

"The market is painting a bear-case scenario as to the unexpected radical shake-up going on within Anglo", he said.

Essentially, Anglo is admitting that it is struggling to cope with the monumental slump in commodity prices.

"Looking back at the past 2.5 years of Mr Cutifani's tenure, we have some sympathy with his strategy to fix the assets given the unrelenting decline in commodity prices", said Barclays analyst Ian Rossouw.

According to a company graph, the miner plans to shrink its workforce to 99,000 next year and 92,000 in 2017 followed by another sharp reduction.

On December 8, 2015 London-based Anglo American plc (ADR) (OTCMKTS:NGLOY) announced its restructuring program.

Cutifani said: "As we redefine our operational footprint, we are aligning our organisation to ensure optimal efficiency and effectiveness".

The miner has told investors it plans to cut 85,000 jobs globally as it merges six divisions into three businesses.

The London-listed Anglo aims to raise US$4 billion through assets sales, up from an earlier target of US$3 billion, and said it would press ahead with the sale of its Phosphates and Niobium businesses in 2016.

To save cash, the group also announced that it was also suspending its dividend through 2016 and would restart the payout during 2017.

He said: "Upon their resumption, the dividend policy will reflect a pay-out ratio to provide flexibility through the cycle and clarity for shareholders". "We think it's the right thing to do to make sure the company remains in good shape".

Capex reductions of a further $1 billion are expected to the end of 2016.