London - Global mining group Anglo American said on Thursday it had agreed to sell its niobium and phosphates businesses to China Molybdenum for $1.5 billion in cash to reduce its debts.
The group is selling parts of its business in a sweeping strategic overhaul to cope with a commodities rout that has triggered a fight for survival even among heavyweight miners.
“The proceeds from this transaction ... will enable us to continue to reduce our net debt towards our targeted level of less than $10 billion at the end of 2016,” Anglo's Chief Executive Mark Cutifani said in a statement.
The niobium and phosphates businesses consist of mines, plants, processing facilities, chemical complexes and deposits and are located in Brazil.
Analysts said that on first sight, it was a good move for Anglo American.
“I believe it's very significant for Anglo and a higher price than the market expected,” Jeremy Wrathall, analyst at Investec said.
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The deal is subject to certain approvals and is expected to close in the second half of the year.
Niobium is a component of the high-strength steels used for cars, ships, high-pressure pipelines and infrastructure across the petroleum and construction industries.
Phosphate can be used for coating steel and for fertiliser.
REUTERS