Global miner Anglo American has announced a major restructuring due to tumbling commodity prices and the economic downturn that has hit the mining industry. The UK-based company will reduce its workforce by 63% with 85,000 jobs to be shed as it streamlines its business from 55 mines to around 20.

The news followed the company’s decision to suspend paying a dividend for the second half of 2015 and 2016, a move that saw investors react with dismay and a resulting 11% fall in the share price to 327.30 pence, a record low.

Anglo says that four coal mines in Australia remain up for sale – Dawson, Foxleigh and Callide in Central Queensland, and Dartbrook in the Hunter Valley of NSW.

Chief executive Mark Cutifani told investors that the company planned to sell or close more of its mines globally. “Compared to where we were 12 months ago when we talked about 70 assets, we are now down to 55 and our target restructuring was to get down to 36.”

However, he said there would be no fire sale of assets. “We will be materially downsizing the portfolio beyond our previously advised targets. Literally 60% from where we are today.

Negative cash flow assets will be closed, placed on care and maintenance or sold.”

Anglo American has operations in southern Africa, North and South America and Australia. The resources it mines include iron ore, coal, diamonds and copper.

It says it is radically restructuring its business to make the company more resilient so it can cope with the collapse in commodity prices. The company announced that it will consolidate from six to three businesses and will also move its London office to ‘co-locate’ with DeBeers, its majority-owned diamonds business by 2017.

Anglo will sell its phosphates and niobium businesses during 2016 while $3.7 billion of cost and productivity improvements are under way and set to be completed by 2017. As part of the restructuring, Anglo American’s diamonds business will be run by De Beers, its platinum and base metals operations will come under Industrial Metals, and its Bulk Commodities division will concentrate on coal and iron ore.

Mark Cutifani said, “We will set out the detail of the future portfolio in February, with the aim of delivering a resilient Anglo American and a step change in the transformation of the company.”

A company spokesperson said the job cuts would be made through asset sales and internal cuts: “Bear in mind that these include assets we will sell, so the 85,000 jobs don’t [all] disappear as many will be employed by new owners of those mines that we sell.”

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