Anglo American sells assets to cut debt

Portia Nkani
Thursday, 18 February 2016
Anglo boss, Mark Cartifani Anglo boss, Mark Cartifani

Anglo American, a globally diversified mining business has revealed its  plans to sell its iron ore, coal and nickel units as part of a sweeping strategic overhaul to cope with commodities disorders.

Anglo American, which holds an 85 percent interest in DeBeers, says this is a strategic focus on world class assets and sustainable positive free cashflow to strengthen its balance sheet.

The company said in a statement this week Tuesday, that the wide ranging restructuring of the group’s portfolio is intended to create  ‘the new Anglo American.’ Responding to questions during a media roundtable teleconference at DeBeers Botswana offices this Tuesday, Gareth Mostyn, DeBeers Chief Finance Officer said, ‘Anglo American wants to focus on its core positions, that is copper, platinum group metals and diamonds, which are tailored more on the consumer market.’

The company will focus on competitive, long life assets with considerable organic growth opportunities that mine consumer driven materials that are expected to benefit from long term growth trends as the global economy evolves and developing economies mature. He added that these measures will continue the transformation of the company to create the new Anglo American, positioned to deliver robust profitability and cashflows through the price cycle.

Meanwhile, Anglo American has increased the target for the disposals programme to between $5-billion and $6-billion by the end of 2016, of which $3-billion to $4- billion were expected in 2016. In 2015, the group completed or announced $2.1-billion in disposals. “We are taking decisive action to sustainably improve our cashflows and materially reduce net debt, while focusing on our most competitive assets,” Anglo American CEO Mark Cutifani commented.

The diversified mining group stated that discussions were underway to assess the potential disposal value of the Moranbah mine and adjacent Grosvenor project. ‘Sales have been agreed for the Rusternberg platinum operations and the Dartbrook and Callide coal mines in Australia, while the sale of the Kimberly Mines has recently been completed,’ reads the statement. 

Anglo American stated that negotiations with potential buyers would take several months to be completed.‘We of course recognise the current challenging environment in which to deliver disposals. We are already engaged with parties interested in several of our assets, but we will only complete those transactions which deliver appropriate value for our investors,’ adds Cutifani.

In light of the commodity price environment, the Company has ceased and is continuing to cease production at a number of operations.

Operations that have been placed on care and maintenance include Peace River Coal and Snap Lake (diamonds) in Canada, while Thabazimbi (iron ore) in South Africa has reached the end of its life and is being closed. Plans have alo been initiated to place Twickenham (platinum) in South Africa on care and maintenance, while Damtshaa (diamonds) operation in Botswana was placed on temporary care and maintenance from January 2016.

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