Johannesburg - Global diversified Anglo American is selling its niobium and phosphates business in Brazil to China Molybdenum for $1.5 billion (R21.6bn) as part of a strategy to dispose of up to $4bn of assets this year.
The sale comes as Anglo buckles under debt and pressure from shareholders to deliver profits, which have resulted in a major restructuring of its divisions.
In February, Anglo said it would halve its business units as the severely depressed commodity price environment continued to hurt the global and domestic mining industries.
Restructuring
Anglo is being trimmed to focus on platinum, diamond and copper. It aims to exit from Kumba Iron Ore and is considering its options, including a potential spin-off at the right time amid tumbling iron ore prices. It also plans to sell some of its thermal and metallurgical coal assets in South Africa and Australia.
It has already sold loss-making platinum assets in Rustenburg to Sibanye Gold.
Anglo American said yesterday that it had reached an agreement with China Molybdenum to sell its niobium and phosphates businesses.
Anglo’s chief executive, Mark Cutifani, said the sale was part of the restructuring of the business.
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“The proceeds from this transaction, together with the ongoing productivity and cost improvements we are driving through the business, will enable us to continue to reduce our net debt towards our targeted level of less than $10bn at the end of the year,” he said.
“This transaction confirms our commitment to creating the new Anglo American, positioned to deliver robust profitability and cash flows through the price cycle.”
The phosphates business comprises a mine, beneficiation plant, two chemical complexes and two further mineral deposits. The niobium business consists of one mine and three processing facilities, two non-operating mines, two further mineral deposits and sales and marketing operations in the UK and Singapore.
Together, the businesses generated earnings before interest, taxes, depreciation and amortisation (Ebitda) of $146 million in the year to December 31. Anglo aims to use proceeds of the sale to pay off its debt to $10bn by the end of the year from $12bn at the end of December last year.
The transaction is conditional upon customary People’s Republic of China regulatory approvals, as well as the approval of China Molybdenum’s shareholders.
Anglo said it had received binding commitments from two of China Molybdenum’s major shareholders, which held a 63 percent stake, to support the transaction. The transaction was expected to close in the second half of the year.
According to its website, China Molybdenum is a Hong Kong and Shanghai-listed company focused on mining and processing, smelting, deep processing, trade and research of molybdenum, tungsten, gold and other precious metals.
BUSINESS REPORT