South32 may bid for Anglo American’s $1.4bn Brazil unit – by Paul Garvey (The Australian – January 15, 2016)

South32’s commitment to a steady-as-she-goes strategy and a conservative balance sheet appears to be tested by the array of large mining assets up for sale, with the BHP Billiton spin-off said to be weighing up a bid for Anglo American’s niobium and phosphate business in Brazil.

Bloomberg reported that South32 was looking to hire an adviser to help in the bidding process for the $US1 billion ($1.44bn) business ahead of a deadline for first-round bids next month.

Anglo has put the assets up for sale as part of a far-reaching $US4bn sell-off of non-core assets under chief executive Mark Cutifani. Major miners such as Anglo, Glencore and North America’s Barrick Gold have all sold or been looking to sell various mines around the world as they look to strengthen their balance sheets amid increasingly weak commodity prices.

South32’s comparatively low debt levels have seen it repeatedly linked to possible corporate activity, with the company having cut its debt by $US206m to just $US196m since its listing.

But chief executive Graham Kerr has consistently signalled an unadventurous approach to mergers and acquisitions, observing repeatedly that the company’s priority was on getting the most out of its existing asset base.

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