Anglo American has removed $2.3 billion (£1.5 billion) worth of costs, aided substantially by an overhaul of its supply chain, asset management and knowledge management, and the introduction of shared services.
The metal and precious stones mining giant saved over £1 billion by optimising how it uses its global sites, including through use of SAP enterprise asset management software in its platinum division. Improvements to the group’s supply chain, and the introduction of a large shared services initiative, equally played a part in the savings.
Anglo American cut a further £462 million through productivity improvements, partly driven by changes at subsidiary Anglo Platinum, where a five year knowledge management transformation has taken place to improve decision making.
There have also been extensive redundancies across the group, with 23,400 staff losing their jobs last year.
The company began a business divestment programme, alongside the ‘One Anglo’ operational improvement plans, four months ago. It also reorganised its core businesses into seven areas: platinum, copper, nickel, metallurgical coal, thermal coal, Brazilian iron ore and South African iron ore, and appointed a mining and technology director, Brian Beamish, alongside four other directors based in its London headquarters.
As Anglo American announced 2009 profits had fallen 53 percent to $4.03 billion (£2.6 billion), it said a “leaner, more effective structure” had helped deliver the savings.
Chief executive Cynthia Carroll said the company had become “more focused and performance-oriented”. The reorganised corporate headquarters in London, she said, “will be responsible for providing strategic support to the businesses and will be focused on delivering synergies, technology and business performance”.
The company was “continuing to deliver clear and substantial value” in asset optimisation and global procurement, she insisted, with cost control remaining a “major focus”.
This year, Anglo American plans to invest £2.7 billion in mining projects, and is “modernising” project management processes and standards, Caroll said, “to ensure they not only capture lessons from previous projects but that they provide us with world class tools for the future allocation of capital and control of major projects”.
Anglo Platinum, a subsidiary of the group, has undergone a series of cost and operational improvement initiatives in recent years. A large knowledge management programme, focusing on tracking information from mining through refining and sales processes, aims to improve decision making.
Anglo Platinum began designing the programme and architecture in 2004 to 2005, with systems delivering benefits from 2008. At the Gartner Business Intelligence Summit in London in February, Anglo Platinum’s head of information management, Johan van Tonder, said data was “the most valuable asset we have”, assisting strategic decisions and “sustainable change”.
The division uses SAP Netweaver business intelligence systems, a Microsoft SQL Server database, EMC Documentum enterprise content management and an Information Builders Webfocus business intelligence platform, among other systems. Managers access data through an SAP single sign on portal.
Effective operational performance monitoring, van Tonder said, required “all management levels to use the same set of reliable information”.