Bheki Mpofu
23 October 2009
Johannesburg — DIVERSIFIED miner Anglo American rang the changes to its management structure yesterday and said it would sell off assets in a bid to streamline operations and focus on its mining portfolio.
Anglo said the restructuring was expected to result in a reduction of overhead staff of about 25% and cost-savings of about 120m a year. CEO Cynthia Carroll promised to save the company 2bn in costs by 2011.
The announcement came just a week after Swiss-based mining group Xstrata walked away from a proposed merger of equals with Anglo, and amid speculation that Xstrata may still put in a bid after six months if Anglo did not improve its performance.
Xstrata's merger approach put Carroll under pressure to appease shareholders, who have been disgruntled by the group's underperformance .
Anglo said it would create seven business units based in the core geographic areas for the operations, whose CEOs would report directly to Carroll.
The group would now be organised around its core commodities and geographies: with platinum based in SA, copper in Chile, nickel in Brazil, metallurgical coal in Australia, thermal coal in SA and iron ore in Brazil.
Previously, Anglo's business units were platinum, base metals, ferrous metals, coal, diamonds, exploration and corporate activities. As a result of the reorganisation, a layer of global management was being removed, and was expected to create a "more effective, simple and efficient organisation, with greater clarity over decision making and greater speed of implementation".
The assets to be sold off include producer of steel products Scaw Metals Group; Brazilian phosphate miner Copebras, Brazilian ferronio bium producer Catalao, and British aggregates supplier Tarmac. The assets represented 11% of the group's earnings base, Anglo said.
Over the past three years Anglo has sold off several noncore assets, including the de-merger of the paper group Mondi and the sale of the group's shareholdings in AngloGold Ashanti , Highveld Steel and Vanadium, Namakwa Sands and, most recently, Tongaat Hulett and Hulamin .
"The divestment will be undertaken in a manner and on a timetable that will maximise value for Anglo American 's shareholders," the company said.
"I believe that these actions will position Anglo American well for sustained, profitable growth in the commodities we have identified as being the most attractive," Carroll said. "The portfolio changes we have announced are the logical next step in focusing the group on our core mining activities, enabling us to strengthen our balance sheet further.
"The delayering creates the opportunity for a new generation of executive management to come through and I look forward to working with them," she said.
Three senior managers -- Philip Baum, head of ferrous metals; Ian Cockerill, head of Anglo Coal; and chief strategy officer Russell King -- will be leaving .
Chairman John Parker said the announcement was "an important step in creating a more streamlined business, with enhanced focus on operational effectiveness and project delivery ".
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