Anglo American in talks to sell zinc business worth $1 billion news
07 April 2010

Anglo American, the diversified London-based miner, is in advanced talks to sell its zinc business, valued at more than $1 billion, as part of a forced restructuring after a failed acquisition attempt late last year by rival Swiss miner Xstrata. (See: Anglo American rejects Xstrata's $68-billion deal )

According to media reports, Anglo American is closer to selling its entire zinc businesses to one buyer and a few rival mining companies are in the process of bidding for it.

The zinc assets being offloaded by Anglo American include its Skorpion mine in Namibia, Lisheen mine in Ireland and the Black Mountain mine and Gamsberg Project in South Africa, in which Exxaro Resources holds a 26 per cent stake.

Anglo's zinc operations output was 3,40,500 tonnes last year.

Some of the world's biggest zinc miners, like mining company Xstrata, world's largest commodities supplier and largest shareholder of Xstrata Glencore, owner of Europe's largest zinc mine Boliden of Sweden, and even China Minmetals are likely to bid.

Among the interested bidders is also London-listed Vedanta Resources' Indian subsidiary Hindustan Zinc Ltd, which holds a 79.7 per cent market share in India.

China Minmetals is looking to expand its zinc business and had acquired the world's second largest zinc producer, Australia's OZ Minerals, in June 2009 for $1.4 billion.

Xstrata is interested in Anglo's Lisheen mine in Ireland since it is close to one of it own zinc mine, but would not be averse to buy all the zinc assets of Anglo. The Lisheen mine reserves run out in the next four years although it was the biggest contributor to Anglo's profit last year.

Glencore has zinc business in Latin America, Italy and Kazakhstan, but would not be able to get synergies with the Anglo zinc acquisition, according to analysts.

After the failed takeover attempt by Xstrata, Anglo American, led by chief executive Cynthia Carroll had announced a major restructuring of the company and said that it would sell its non-core assets worth $7 billion in order to focus on its core mining portfolio and streamline the group's management structure. (See: Anglo American to sell non-core assets worth $7 billion)

The assets identified for sale then included 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, Namibia and Ireland.

In addition, the group had also planned 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.

In February, Anglo sold its Tarmac's construction businesses in France, Germany, Poland and the Czech Republic to Eurovia, a subsidiary of the Vinci Group for $400-million. (See: Anglo American to sell Tarmac Europe for $400 million)

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Anglo American in talks to sell zinc business worth $1 billion