More reports on: M&A, Mining
Anglo American to sell non-core assets worth $7 billion news
26 October 2009

Anglo American Plc, one of the world's major diversified mining entities, plans to sell its non-core assets in order to focus on its core mining portfolio and streamline the group's management structure.

The restructuring move comes a week after Swiss rival Xstrata pulled out of its $68 billion merger deal, which can re-bid only after six months, as per UK's Takeover Panel regulations. (See: Xstrata abandons Anglo bid, for now)

The London-based miner said in a statement that the assets identified for sale include Scaw Metals, a maker of various steel products with operations in North and South America and South Africa, Copebras, a Brazilian producer of phosphate fertilizers, Catalao niobium mines in Brazil and the group's portfolio of zinc assets in South Africa and Ireland.

In addition, the group plans to sell Tarmac, UK's market leader in aggregates, asphalt and concrete. Tarmac was put on block in 2007, though the sale process was stuck following the global credit crisis. Anglo American acquired Tarmac for 1.2 billion in 1999.

These non-core assets contributed approximately 11 percent of the group's 2008 EBITDA, the statement said.

Although valuation of the saleable assets has not been disclosed, analysts estimate the total worth at around $7 billion.

Simultaneously, the miner announced a number of changes across its businesses to create a more streamlined management structure by creating seven commodity business units located in the area of core geographic focus.

These units include platinum and thermal coal based in South Africa, copper centered in Chile, metallurgical coal operations in Australia, nickel and iron ore in Brazil and its subsidiary Kumba Iron Ore Limited in South Africa.

Anglo American chief executive Cynthia Carroll said, ''I believe that these actions will position Anglo American well for sustained, profitable growth in the commodities we have identified as being the most attractive. The portfolio changes we have announced are the logical next step in focusing the Group on our core mining activities, enabling us to strengthen our balance sheet further.''

It was further announced that a layer of the group's global management staff of approximately 25 per cent is being removed, which is expected to result in cost savings of around $120 million per annum.

''The delayering creates the opportunity for a new generation of executive management to come through and I look forward to working with them,'' Carroll said.

John Parker, who took over as chairman of the group barely 3 months ago, said: ''Today's announcement represents an important step in creating a more streamlined business, with enhanced focus on operational effectiveness and project delivery.''

The divestment of non-core assets will be managed by Duncan Wanblad, group director, the company said.

Anglo American is a global leader in mining with diverse mining assets in its portfolio. The group operates in 45 countries across the globe in six continents, employing around 105,000 people. It reported revenue of $33 billion and a net income of $5.2 billion in 2008.

The group's third quarter results announced last week showed a 13 per cent increase in copper production compared to the corresponding quarter last year. Both iron ore and platinum outputs registered a growth of 16 per cent each. However, thermal coal production declined by a marginal 1 per cent in the September quarter.

Production of rough diamonds in the third quarter increased by 43 per cent compared with the second quarter. The miners interest in diamonds is through De Beers, the world's leading producer, in which Anglo American holds 45 per cent stake.

Anglo American raised $671 billion during the third quarter by selling stakes in South Africa's sugar producer Tongaat Hulett and aluminum processor Hulamin.

UBS AG and Goldman Sachs Group Inc are acting as advisors to Anglo American on the sale of non-core assets.

 search domain-b
Anglo American to sell non-core assets worth $7 billion