Japanese duo eyes Anglo assets

JAPANESE trading houses Itochu and Mitsui have bid separately for a stake in Anglo American’s manganese assets in Australia and SA as the diversified mining house shrinks its business.

JAPANESE trading houses Itochu and Mitsui have separately bid for a stake in Anglo American’s manganese assets in Australia and SA as the diversified mining house shrinks its business to weather the commodityprice rout, according to people with knowledge of the matter.

Anglo was considering the offers for its 40% holding in a manganese joint venture with South32, the people said, asking not to be identified as the information is private. Perth-based South32 had an option to buy the stake, which may fetch as much as $700m, and might pre-empt an agreement with another party, one of the people said.

Anglo is seeking to raise about $4bn from selling mines including those that produce iron ore and coal, to cut debt after commodity prices slid.

The London-based company, which is focusing on assets that produce diamonds, platinum and copper, agreed last week to sell its Brazilian niobium and phosphate businesses to China Molybdenum Company for $1.5bn in cash. Spokesmen for Anglo, Itochu, Mitsui, and South32 declined to comment.

South32, which was spun off from BHP Billiton last year, said in February it would be willing to acquire Anglo’s stake in their manganese joint venture if the price was right.

South32 owns 60% of the Samancor venture and is the operator. The business, which is the world’s biggest producer of the material used in steel-production, holds mines and smelters in SA, as well as the Gemco mining operations in Australia’s Northern Territory, and the Temco alloy plant in the nearby Tasmania.

A restructuring of the manganese operations in SA, announced in February, would reduce costs, cut production, and lay off about 620 staff in response to a plunge in prices last year and help the business boost its ability to generate cash, South32 CEO Graham Kerr said at the time.

Anglo, which is also selling metallurgical coal mines in Australia and a nickel business in Brazil, last year agreed to sell two copper mines in Chile to a group of investors led by Audley Capital Advisors for $300m in cash upfront.

Last week, Anglo American CEO Mark Cutifani said the group intended to reduce its debt to less than $10bn by the end of this year.

Anglo has set itself a target to more than halve net debt to $6bn within three or four years.

Anglo unveiled sweeping changes to the business in February, cutting its asset base to just 16 mines from more than 45 and discarding coal, iron ore, manganese and nickel mines in Australia, SA and Brazil.

Last week’s sale of its niobium and phosphate mining business in Brazil for $1.5bn is the single largest disposal by Anglo since it told the market in December last year and February of a major restructuring to raise $3bn-$4bn from asset disposals this year. The aim is to reduce net debt of $12.9bn to more manageable levels.

Last year, Anglo raised $2.1bn from asset sales and it intends lifting that number as it narrows its focus to diamond, platinum, and copper operations.