One of the world's biggest mining companies is cutting 5,500 jobs because of the slowdown in China

Chainsaw timber wood cutSteve Dykes/Getty ImagesCuts are coming.

Anglo American is slashing its business to the bone.

The mining giant on Tuesday announced a radical reduction in its business, cutting 60% of jobs, selling off huge swathes of assets, and stopping mining of commodities like Nickle.

The restructure is in a bid to boost free cash flow, reduce debt, and better prepare the FTSE 100-listed mining giant for a future where China isn’t building a new City every month.

Here’s the key points from Anglo’s restructure:

  • Cutting core assets from 45 to 16, focusing on diamond business De Beers, platinum group metals, and Copper;
  • Selling $5-6 billion of assets by the end of 2016. $2.1 billion were sold in 2015;
  • Cutting $1.2 billion worth of costs this year;
  • A $3 billion reduction in capital expenditure this year and a further $500 million cut in 2017;
  • Reducing staff from 11,500 to 5,000, mainly due to the sell-off of assets.

Anglo American says the sweeping changes are needed due to “market shifts,” the biggest of which is:

…the next phase of growth in China, which is seeing the evolution away from bulk commodity intensive infrastructure development to increasing demand for base and precious metals for homes, vehicles, household appliances and electronics, as well as for luxury goods such as diamond and platinum jewellery.

China has been trying to shift its economy away from one of production and manufacturing towards a consumer-based economy. In doing so, it has brought-the-once-in-a-lifetime building boom that the country experienced throughout the 2000s to an end.

China spent 10 years hoovering up the vast majority of metals and other resources pumped out across the world and its slowing growth is now leaving a demand shortfall. That has lead to a collapse in the price of many metals.

Mining companies have been hard hit as a result, with Anglo American’s share price down over 70% since last May.

The sweeping restructure of Anglo’s business comes as it announced its preliminary results for 2015. As you might expect, they’re pretty bad. Here are the key points:

  • Earnings before interest or tax: $2.2 billion, down 55% on 2014;
  • Revenue: $23 billion, down 26% on 2014;
  • Loss before tax: $5.4 billion, from $259 million in 2014.

NOW WATCH: This 27-year-old quit her corporate finance job to travel the world

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.