Even for a company that once had the global monopoly on diamond production during almost a century of all but constant expansion, the collapse in commodities prices is proving too much.
Anglo American Plc, a conglomerate spanning everything from brewing, publishing and gold mining during its peak in the early 1990s, will shrink beyond recognition after Chief Executive Officer Mark Cutifani on Tuesday announced a package of asset sales, mine closures and job cuts.
Among the potential casualties is Minas Rio, a Brazilian iron-ore mine where spiraling costs and collapsing prices turned a $14 billion project into the epitome of the company’s predicament.
“Minas Rio is the high water mark of their mistakes,” said Jeremy Wrathall, head of global natural resources at Investec Plc. “It was a series of strategic errors, the collective madness of the super cycle where everyone got it wrong.”
Like banks before the financial crisis or energy companies before the collapse of oil prices, Anglo American is the classic tale of over-extending during the good times only to be left with too much debt and too little money when markets take a dive.
Anglo American will eventually employ 50,000 people, 85,000 fewer than now, Cutifani said. It will control a maximum of 25 assets, down from 55 today. Any mines that don’t make money will be put up for sale or simply shut.
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