Anglo American to accelerate its cost cutting
GLOBAL mining company Anglo American said on Friday it would shed thousands of jobs in the next couple of years and might put up more assets for sale as it battles an accelerating slump in metal prices that has dragged its shares down to a 13-year low.
The company posted a steep fall in first-half profit after a rout in prices of metals from platinum to iron ore, and said the next six months could be even worse.
“Quite frankly, we didn’t expect the commodity price rout to be so dramatic and in all likelihood the next six months are going to be even tougher,” chief executive Mark Cutifani said during a presentation with analysts. “We have pulled costs out of the business, but we need to do more, because prices continue to deteriorate.”
If market conditions soured further, the company would consider putting up for sale more of its underperforming assets than currently planned, Cutifani said.
The London-listed company, in the middle of a turnaround effort launched by Cutifani in 2013, has suffered more than peers from the drop in metal prices, mostly due to higher-cost iron ore operations than its larger competitors and a platinum division afflicted by rising costs and falling prices.
It has seen its share price shedding about a third this year as investors worry about the slow pace of Cutifani’s revamp, focused on improving the productivity of its mines and divesting non-core assets.
Investors reacted positively to Anglo’s decision to maintain its dividend and to its plans to accelerate its costcutting programme. – Reuters
See page 15 Add to that the alleged assassination plot by former MK members against Molefe and you will soon see how Prasa has effectively come off the rails. In the meantime, Eskom is still battling to save the grid from collapse, SAA faces renewed turbulence just when efforts to stabilise the airline were gaining some traction – or so we were led to believe.
Meanwhile, the mess at PetroSA’s continues as the entity looks poised to rack up even more losses. But why are the parastatals in such a bad shape? Some point to the powerful influence that the boards yield over executive managements.
The Prasa, Eskom and SAA boards are particularly notorious for mapping the path that the executive should follow.
Last week, a senior ANC leader detailed how these powers should be clearly defined as the boardroom fights affected the economy in the long term.
Competition
Such bullying tactics would be condemned as outright intimidation on the executive. But SAA is no ordinary business and its shareholder is not an ordinary shareholder.
Economist Chris Hart from Investment Solutions said the problem with state-owned enterprises was that they were being run as political enterprises with no guarantee for a return.
Hart said with more effort to clean up their corporate governance, these enterprises could end up funding the government’s developmental agenda.
“What you do every time the state-owned entity hit problems is that you invest dead capital into it,” said Hart.
“You need to privatise, even if partially, to draw in much needed expertise.
Even so, there are a few exceptions that have shown that the developmental needs of the state can be funded by well run parastatals.
Being a “disciplined force of the left” does not hinder the government, look at some of its success stories in flagship parastatals like Transnet, Telkom and Denel.