LONDON—Anglo American has announced a series of cutbacks, piling further pressure on suppliers of conveyor belts to the sector.
The miner said on Dec. 8 that it will shrink its workforce down to 50,000, from a current level of around 135,000, and reducing its asset holdings by 60 percent—among other cost-cutting measures.
London-based Anglo America is also reducing 2015 and 2016 capex by $1 billion and reducing its 2017 capex to $2.5 billion—around 55 percent below its 2014 expenditure.
“While we have continued to deliver our business restructuring and performance objectives across the board, the severity of commodity price deterioration requires bolder action,” CEO Mark Cutifani said during the unveiling its accelerated rationalization plan.
Also feeling the pain are conveyor belt manufacturers as evidenced most recently by ContiTech's decision to close its belts plant in Bowmanville, Ontario due to excess capacity throughout North America and worldwide.
“The worldwide mining industry has been in a slump for many months,” noted Hannes Friederichsen, head of the Conveyor Belt Group.
He added that 71 major mines around the world had been forced to close this year, with 17 of them closing between July and September alone.
Another major player Fenner P.L.C. recently reported a drop in sales and earnings in its engineered conveyor systems (ECS) business, which produces heavy conveyor belts for mining, power generation and bulk handling markets.
In its financial year ending 31 Aug, ECS generated revenue of $436.2 million down from 2014's $496.3 million at constant currencies. Fenner reported operating profit came in at $25.4 million on Nov. 11, down from $47.9 million in 2014.
Fenner said that its ECS business faced another year in which trading conditions in each of its principal markets showed further deterioration, especially in the U.S. coal industry.
In a bid to right-size its factory capacity to suit medium-term levels of demand Fenner cut jobs at its factories in China and England during 2015 in addition to ongoing restructuring in North America, according to its release.