Concerns over the global mining industry grew after it was reported that Anglo-American said that it would be letting go 85,000 employees or 63 percent of its workforce. Many analysts are calling it a radical restructuring meant to cope with tumbling commodity prices. It is important to point towards the fact that shares in the company and several of its rivals have plunged since the beginning of the year as the industry struggles with a drop in demand for metals and fuels, particularly from the world’s second largest economy which continues to show faltering growth and is being seen as a huge negative.
In a statement, Anglo said that it would create a streamlined and tighter portfolio going from some 55 mines and smelters to around 20. CEO Mark Cutifiani said that the drop in commodity prices requires bolder action even though the company has delivered on performance and business restructuring objectives. Shares of the company plunged by close to 8 percent during the trading session on heavy volumes indicative of the strong bearish momentum. It is important to state that analysts on the street continue to remain bearish about the commodity price outlook for 2017 which is being seen as a huge negative.
When looking at the charts for Anglo-American, the stock has been in a strong downtrend. The stock has been forming lower tops and lower bottoms indicative of the fact that bears are using every rally in the stock as a selling opportunity. The stock currently trades below all important daily moving averages. The stock hit a fresh 52-week low during the trading session which is a huge negative. The momentum indicators for the stock continue to trend lower and show no signs of a reversal at the current moment. Traders believe the stock could head to 313.45pence