Now that the distraction of a potential tie up with Xstrata is out of the way, Anglo American (LSE, AAL) CEO Cynthia Carroll is getting the house in order with the implementation of a programme that will see the miner shed a quarter of its managers whilst decentralising its business and selling assets. The de-layering and other efficiency measures are expected to result in cost savings anticipated at US$120 million per annum adding further weight to her argument that a union with Xstrata is not neede
Businesses facing the axe include steel focused Scaw Metals, fertiliser producer Copebras, ferroniobium producer Catalao and the group's portfolio of zinc assets. The disposals are significant and together with buildings supplier Tarmac, which was identified as a non-core asset some time ago and is now back on the market, the unwanted assets accounted for approximately 11% of group earnings in 2008.
CEO Carroll can not be accused of sitting on her hands and recently announced that the company expects to save US$2 billion (£1.2 billion) through better procurement and mine efficiency improvements by the end of 2011 - a lofty target, but achievable nonetheless. Focusing on the present and having posted savings of US$450 million in the first half of the year, management has zoned in on achieving $1 billion in savings for the year as a whole.
Anglo’s revolving boardroom door has the potential to be a distraction however the group’s third quarter production report has put paid to this idea. Copper output rose by 13% year on year, while iron ore output climbed 16% and refined platinum production rose 16%. In addition, rough diamond production was up 43% quarter-on quarter.
Whilst the sparkle of the precious metals grabs the commodities headlines, copper is leading the way and Anglo’s copper operations at Collahuasi and Los Bronces provide plenty cause for optimism. Collahuasi saw improved grades and recoveries, whilst production at Los Bronces was improved due to increased throughput. And what’s more, the Los Bronces copper expansion project is nearing completion and will provide a significant springboard for earnings.
Meanwhile the group’s output expansion in the platinum could not be better timed. Given its prominent role in the automotive industry as well as world of jewellery, the precious metal is almost a direct play on the Chinese economy and with Anglo on track to meet full year target of 2.4 million ounces whilst improving…
