Anglo American, a prominent mining company listed on the FTSE 100, has announced its intentions to undergo a significant restructuring of its business operations. This news comes shortly after the company rejected a takeover bid from a larger competitor.
In a statement released to shareholders, Anglo American revealed plans to divest its 85% stake in De Beers, the world’s largest diamond producer. Additionally, the company will sell its thermal coal assets and demerge its shareholding in Johannesburg-listed Anglo American Platinum, known as Amplats. The company’s decision to focus on its copper, iron ore, and crop nutrient assets reflects a shift towards a more streamlined and efficient business model.
However, as part of this restructuring, Anglo American has also announced the possibility of job losses. The company plans to slow work on the Moorside mineral fertiliser mining project in North Yorkshire, which could result in reduced employment opportunities.
This announcement follows Anglo American’s rejection of a £34bn takeover bid from Australian-based BHP. The company stated that the offer “continued to significantly undervalue the company and was highly unattractive” for its shareholders. Anglo American believes that its new strategy will result in annual cost savings of $1.7bn.
Chief Executive Duncan Wanbled expressed confidence in the company’s new direction, stating, “We expect that a radically simpler business will deliver sustainable incremental value creation through a step change in operational performance and cost reduction.”
Despite this vote of confidence from its leadership, Anglo American’s shares saw a decline of more than 2.5% in response to the news. This suggests that shareholders are not entirely convinced by the company’s roadmap for the future. Anglo American has been in discussions with investors since the initial takeover approach from BHP in April.
The decision to restructure the company’s operations comes after a review of all assets in February, prompted by a 94% drop in annual profit and writedowns at its diamond and nickel operations. AJ Bell investment director Russ Mould commented on the situation, stating, “The plan has been greeted with a shrug by the market, and it raises a troubling question for the incumbent management: why has it taken a takeover approach to prompt this radical action if it’s the right strategy for the future?”
