Things in the mining and commodity industries are going to get even worse before they get better.
That’s the message from Anglo American CEO Mark Cutifani, as first reported by Reuters.
Speaking at a mining conference in South Africa, Cutifani, who took over as Anglo boss in April 2013, said that being in the mining industry could very well prove even harder in 2016 than it has in the past few years.
Here’s the full quote (emphasis ours):
Moreover, we can’t rely on a reversal of this price slump any time soon. 2016 is already shaping up to be the most challenging yet. Opinions are divided on whether we have reached the bottom of the cycle … So things may still get worse before they get better.
The price of commodities has crashed by more than 50% in recent years as a global oversupply of many raw materials, and a slowdown in China, the world’s biggest commodity importer, pushes prices downwards, wreaking havoc with performance of many of the world’s largest mining firms. Anglo American has been one of the worst victims of the crash.
Shares have tanked since 2011, down by nearly 90%, and lost more than 70% of their value in 2015 alone. The price crash has also forced the company into what it calls a “radical restructuring” of its business. That restructure will include cutting around two thirds of Anglo’s total workforce.
Cutifani spoke about the restructuring on Monday, but was keen to see the positive side of things: “We will be making the appropriate commercial decisions to exit a number of our mines in several countries around the world – but let’s not see that as a negative step,” he said, adding that for “the assets that we choose to exit, it is about giving many of them and their employees a more sustainable future under new ownership that is better suited to focus attention and capital on those assets.”
He also said that Anglo American won’t necessarily be cutting production to deal with slumping prices, saying: “This strategy generally has a net negative effect.”
Earlier today, the miner released results for its platinum business, and things were, unsurprisingly pretty bad. Anglo American Platinum, which is listed in South Africa, booked a loss of around $760 million (£527 million) during 2015, down from the small profit of $3.9 million (£2.7 million) in 2014.
On top of the loss, the company saw $870 million (£600 million) of impairments last year. The price of platinum fell 27% in 2015, and is down more than 50% since peaking in 2011.