Anglo American cuts add to belt makers’ woes
London – Global mining giant Anglo American has announced a series of swingeing cutbacks, piling further pressure on suppliers of conveyor belts to the sector.
On 8 Dec, the miner said it was shrinking 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 American is also reducing 2015 and 2016 Capex by $1 billion (€917 million)and reducing its 2017 Capex to $2.5 billion – around 55 percent below its 2014 expenditure.
Unveiling the “accelerated” rationalisation plan, chief executive Mark Cutifani said: “While we have continued to deliver our business restructuring and performance objectives across the board, the severity of commodity price deterioration requires bolder action.”
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 business unit Conveyor Belt Group. This year, he reckoned, 71 major mines around the world had been forced to close, with 17 of them closing between July and September alone.”
Another major player Fenner PLC 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 £400.5 (€566.5) million down from 2014’s £455.6 million at constant currencies, Fenner reported 11 Nov. Operating profit came in at £23.3 million, well down on last year’s £44 million.
Looking ahead, Fenner said that its ECS business faced “another year in which trading conditions in each of its principal markets showed further deteriorations, especially in the US 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 the UK during 2015.
A restructuring is also “on-going in North America,” the statement added.