Anglo American to sell Brazil units for $1.5bn

Anglo American has agreed to sell its niobium and phosphates businesses in Brazil to China Molybdenum for a cash consideration of $1.5bn.

The phosphates business consists of a mine, beneficiation plant, two chemical complexes and two further mineral deposit.

The niobium business comprises one mine and three processing facilities, two non-operating mines, two further mineral deposits and sales and marketing operations in the United Kingdom and Singapore.

Combined, the businesses generated earnings before interest, taxes, depreciation and amortisation of $146m in the year ended 31 December 2015.

Chief executive Mark Cutifani said: “The sale of our niobium and phosphates businesses is another positive step forward in the strategic reshaping of Anglo American that we set out in February. 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 2016.

“This transaction confirms our commitment to creating the new Anglo American, positioned to deliver robust profitability and cash flows through the price cycle."

At 1100 BST, Anglo American shares were up 2.9% to 717.60p.

Mike van Dulken, head of research at Accendo Markets, said investors are clearly subscribing to the view that smaller and less diversified is now better in this new world of lower commodity prices.

“The disposal will serve to cut debt and bolster the embattled miner’s balance sheet, much to investor glee, leaving it in a much stronger and leaner position both operationally and financially.”

RBC Capital Markets said Anglo got a “top price” for the assets, with $1.5bn at least $500m above estimates.

“This is positive for Anglo today, but these are among the best assets which are up for sale,” said analyst Des Kilalea.