Anglo American CEO: Major opportunity to cut costs
There is significant opportunity to reduce costs and improve productivity in the mining industry, Mark Cutifani, chief executive of Anglo American, told CNBC on Friday.
The global miner reported a 15 percent drop in first-half operating profit on Friday to $3.3 billion, ahead of a consensus estimates of $3.12 billion. The company said it would cut spending in order to boost cash flow by $1.3 billion a year by 2016. It also announced a far-reaching restructuring of its 10 business units and a management shakeup.
Anglo American's shares closed 1.46 percent higher on Friday.
"Half of our portfolio is delivering less than the 10 percent on capital employed. For me, the break-even return for our industry is 15 percent," Cutifani told CNBC Europe's "Squawk Box".
"If I take our first half performance and spot prices today and I annualize that against our first half performance, our return on capital employed is 8 percent."
"We've got to find another $3.5 billion worth of cash flow in the business to get ourselves above 15 percent," he said, adding that it was a priority for the business as it looks to change its business model.
Cutifani, who joined the miner in April, said the company had to do a better job "on a lot of fronts, particularly in delivering value to shareholders."
The company's share price has declined 26 percent year-to-date because of delays and cost overruns at its Brazilian iron ore project and mass protests in its subsidiary Anglo American Platinum's South African mine.
"It's about the assets – we need the engine delivering to its potential… It's about making sure our relationships are right so we can deliver real value to our shareholders, obviously that means talking about South Africa and working with the government to make sure we've got the balance right."