Anglo American, a conglomerate spanning everything from brewing, publishing and gold mining during its peak in the early 1990s, will shrink beyond recognition after CEO Mark Cutifani announced an eye-watering package of asset sales, mine closures and job cuts.
Among the potential casualties is Minas Rio, a Brazilian iron-ore mine where spiralling costs and collapsing prices turned a $14 billion (€12.88bn) project into the epitome of the company’s predicament.
Founded in 1917 by entrepreneur and philanthropist Ernest Oppenheimer, Anglo American was built on the back of South Africa’s giant gold mines.
Moving into diamonds with control of De Beers after Oppenheimer was elected to the board in 1926, it owns 85% of the company after selling it and then buying it back, and then adding platinum and coal, Anglo grew rich and powerful through much of the 20th century.
Under Ernest’s son, Harry, the company broadened its horizons.
The company bought Hudson Bay Mining in Canada in 1961.
The company went on to expand into steelmaking, timber and pulp and then copper in South America.
More recently, it sought to expand into iron ore to tap China’s seemingly insatiable need for steel.
“Minas Rio is the high water mark of their mistakes,” said Jeremy Wrathall, head of global natural resources at Investec.
“It was a series of strategic errors, the collective madness of the super cycle where everyone got it wrong.”
Like banks before the crisis or energy companies before the collapse of oil prices, Anglo American is the classic tale of over-extending during the good times.
Anglo American will eventually employ 50,000 people, 85,000 fewer than now, Mr Cutifani said. It will control a maximum of 25 assets, down from 55 today.
Any mines that don’t make money will be put up for sale or simply shut.
Still, banks said even these drastic cuts might not be enough should weak commodity prices prevail.
Anglo fell as much as 14% yesterday to a record low in London trade.
The stock has slumped 77% this year and is the worst performer in the benchmark FTSE 100 index.
The announcement comes after Lonmin, another UK-based mining company focused on Africa, last month was forced to tap shareholders to stave off collapse.
Anglo American’s assets “must deliver cash through the cycle,” Mr Cutifani, 57, an Australian who has been in the top job at the company since 2013, told investors.
“If not, they will not be in the portfolio. It’s as simple as that.”