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Anglo managers facing the axe

Aug 07 2013 12:44

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Johannesburg - AngloGold Ashanti [JSE:ANG], the world's third-largest bullion producer, plans to cut about 2 000 management jobs, or about 40% of its management positions, to reduce costs chief executive Srinivasan Venkatakrishnan said on Wednesday.

Venkatakrishnan told a media conference the job cuts are part of a larger plan aimed at saving the company as much as $482m next year.

AngloGold Ashanti reported a swing to a loss in the second quarter and scrapped its quarterly dividend payment as it tailored its business to survive the low gold price.

Spot gold prices have declined 25% this year, forcing producers to write down assets and pushing smaller mining companies to the brink of closure.

"While we remain positive on the prospects for the gold price in the long term, we've taken the decision to prepare our business for a volatile gold price environment where we believe there may be downside risk in the medium term," said Venkatakrishnan.

The miner has global operations, and posted an adjusted headline loss of 35 US cents in the April to June period compared to earnings of 29 US cents in the previous three months as it wrote down ore stockpiles on a falling gold price.

It scrapped its quarterly dividend payments because of the volatile environment and said it would review its policy at the year end with a view to restating a twice-yearly payout.

Production rose 4% to 935 000 ounces in the quarter, but the company reduced its 2013 target to between 4 and 4.1 million ounces after revising its mine plans.

Like many South African miners, AngloGold has been weighed down by rising production costs and labour disputes as well as falling commodity prices.

South Africa accounts for around 40% of AngloGold's global output and the company's new chief executive Srinivasan Venkatakrishnan has wasted no time removing marginal ounces and digging out free cashflow generation.

"We're phasing some of our expenditure on projects in South Africa and have reduced this year's total capital budget by about $150m, to $1.95bn," said Venkatakrishnan.

AngloGold's former financial director Venkatakrishnan, who took over from Mark Cutifani in May after Cutifani joined Anglo American as chief executive, is aiming to more than halve corporate costs from their 2012 levels.


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