The UK miner said it would not pay a dividend for the second half of this year and all of next year. The last time Anglo American cut its dividend was during the worst of the financial crisis in 2009.
In a presentation to investors, Anglo American said it would sell or close up to 35 mines, leaving it with about 20 sites and cutting employee numbers from 135,000 to fewer than 50,000 after 2017. It will halve the number of business units from six to three: the De Beers diamond operation, industrial metals and bulk commodities.
The company, which mines iron ore, manganese, coal, copper and nickel, said it would cut capital spending by a further $1bn (£670m) to the end of 2016, taking the reduction in capital spending to $2.9bn by the end of 2017. It increased the amount it plans to raise from asset sales to $4bn from $3bn.
Anglo American’s shares fell as much as 9% to a new all-time low of 335p. Its announcement sent all other mining shares down in London with the sector at a 10-year low.
Rio Tinto, the British-Australian miner, also announced a near-$1bn reduction in capital spending for next year, slashing planned investment to $5bn from $8bn in 2014. Its shares fell 5% to £19.60. The companies are responding to a widespread commodities rout that sent the price of oil to a seven-year low on Monday.
Mark Cutifani, chief executive of Anglo American, said: “Together with the additional material capital, cost saving and productivity measures announced today, we are setting out an accelerated and more aggressive strategic restructuring of the portfolio to focus it around our priority one assets.
“While we have continued to deliver our business restructuring and performance objectives across the board, the severity of commodity price deterioration requires bolder action.”
The biggest mining companies are slashing spending and cutting costs to protect their financial strength as prices of metals plunge. The price of iron ore has plunged by almost 40% this year as demand from China has fallen. The price fell 1% on Tuesday to $39.06 a metric tonne, down from $191.70 in 2011.
Mike van Dulken, head of research at the spread betting firm Accendo Markets, said: “The question is whether we are set to see a rush of others doing the same to protect balance sheets in the face of tanking material prices and much reduced demand.”
This article was written by Sean Farrell, for theguardian.com on Tuesday 8th December 2015 12.20 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010