Brazilian sale a coup for debt-laden Anglo – by Allan Seccombe (Business Day – April 29, 2016)

ANGLO American made significant inroads into reaching its asset sales target this year by agreeing to sell its niobium and phosphate mining business in Brazil for $1.5bn in cash to China Molybdenum Company, as part of an intense asset sales process to cut debt and return the company to profit.

The sale is the single largest disposal by Anglo since it told the market in December and February of a major restructuring to raise $3bn-$4bn from asset disposals this year to cut net debt of $12.9bn to more manageable levels. Last year, Anglo raised $2.1bn in asset sales and it intends lifting that number as it narrows its focus to diamonds, platinum, and copper.

Anglo said on Thursday the sale of the profitable, yet low-key niobium and phosphate business in Brazil had been agreed and the final payment was subject to a number of closing and post-closing adjustments in the second half of this year.

CEO Mark Cutifani said the proceeds would help Anglo to meet its target of reducing debt to less than $10bn by the end of this year. Anglo American has set itself a $6bn net debt target within the next three or four years.

An analyst said: “If Anglo wasn’t under such tremendous pressure, this would have been the fourth business it would have kept in its portfolio, but I suppose the fact that it makes money and is a good little business made it that much easier to sell in the current market.” The analyst declined to be named for company policy reasons.

The business generated earnings before interest and tax of $119m, compared with $2.2bn for the group.

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