(Bloomberg) -- Anglo American Plc has started cutting corporate and head office jobs across its global operations, as a slowing world economy damps demand for the commodities it mines. 

The focus will be on corporate positions, after the company earlier this year split its business into two regional divisions, one covering the Americas and Africa and the other Australia. Anglo, one of the world’s biggest miners, started 60-day negotiations with workers in South Africa on Wednesday, a labor law requirement.

“As we progress through 2023, market conditions have weakened and we are still not meeting many of our internal performance targets, creating greater urgency for achieving organizational effectiveness and to reduce our business support costs,” the company said in letter to workers seen by Bloomberg News.

Employees at its iron ore unit were among those informed. An Anglo spokesman confirmed the notices have been sent out in South Africa, but stressed that it’s a global process.

Just two years ago the mining industry was at its zenith, with booming demand and supply bottlenecks pushing many commodities to all-time highs as the world exited the Covid-19 pandemic. Yet since then, the steam has come out of the global economy and China’s crucial property sector has started to wobble. Underlying earnings at Anglo slumped in the first half.

The company said in the letter it plans to simplify its structure, but expects “very little impact on its operations.” The consultation process with staff is expected to end on Oct. 17 and terminations may occur then. 

Poor Effectiveness

“There has also been a significant increase in roles and associated costs in the corporate center and the business head offices over recent years, leading to an increase in initiatives,” the company said in the notice. “This is part of the reason for the poor effectiveness and operational performance that we have seen.”

At Kumba Iron Ore Ltd. 181 workers got notices and 141 jobs are expected to be cut, Livhuwani Mammburu, a spokesman for South Africa’s National Union of Mineworkers said. 

The cuts will be focused on the Anglo Emea Shared Services unit, which has 560 employees. Still, workers employed directly by Kumba and Anglo American Platinum Ltd. will also be affected. Staff at diamond company De Beers won’t, Anglo said. 

The “reorganization, and our focus on prioritizing the most value-adding work to support our operational and strategic objectives means that we expect a potential reduction in corporate office roles across a number of countries,” the company said in a response to queries. “We are now consulting fully on these in line with legislative requirements in the relevant countries.”

The South African notice said employees would have the opportunity to apply for voluntary severance packages, or early retirement for those older than 55.

(Updates with units affected in third-last paragraph, company comment in penultimate)

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