Anglo American shares rally on iron ore output hike, cost-cutting measures
Shares in besieged Anglo American (LON:AAL) soared Thursday after the miner reported increased production and revealed plans to keep lowering costs at its iron ore mines in South Africa and Brazil, which include laying-off about 4,000 employees.
The stock had gained as much as 14% by 2:30pm GMT, reversing some of the heavy losses it has suffered in the last year.
The global miner said production in the fourth quarter of last year rose by 3% compared to both the end of 2014 and the third quarter of 2015. For 2015 as a whole, production climbed by 5%.
Copper and nickel output were up in the fourth quarter of last year, compared to the same quarter in 2014.
When considering full-year figures, Anglo’s copper and iron ore production fell by 5% and 4% respectively. Thermal coal, nickel, and diamonds output also decreased in 2015, though platinum production grew 25% to 2.3 million ounces.
Anglo’s Kumba Iron Ore unit, based South Africa, said it would scale back operations and cut costs at its flagship Sishen mine, Africa’s largest iron ore operation. The restructuring, said the firm, will result in the loss of 2,633 permanent roles and 1,300 contractors.
The planned job cuts mark the first stage of Anglo’s intentions to reduce its workforce from 135,000 to 50,000 by 2017, as it also looks to sell off or close around 60% of its assets. When revealing the plan in December, CEO Mark Cutifani said the company was aiming for $4 billion in disposals, although some analysts have questioned whether it will meet its target.
Anglo American will be “a very different company” after it follows through on the restructuring plan, Cutifani promised.
The miner became the second-worst performer in the FTSE 100 after Glencore (LON:GLEN) in 2015. It has lost about 75% of its value in the past year.