Mining giant Anglo American is making progress on its quest to chip away at its $12.9 billion (£8.8 billion) debt pile, raising $1.5 billion (£1 billion) to do just that by selling off two of its businesses.
Anglo on Thursday announced that it is selling its Niobium and Phosphates businesses for a total cash consideration of $1.5 billion to China Molybdenum, a state-owned mining giant. The businesses are both based in Brazil and include chemical plants and processing facilities.
Anglo, which owns De Beers diamonds, said the proceeds of the sale will go towards reducing the company’s debt to below $10 billion (£6.8 billion) as part of its long-term plan set out in February. The company plans to sell between $5-6 billion (£3.4-4.1 billion) of assets and reduce its core staff from 11,500 to just 5,000.
CEO Mark Cutifani says in Thursday’s statement:
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 $10 billion 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.
Anglo reported an annual loss of $5.4 billion (£3.7 billion) in February. Like most miners, the company is struggling with a slump in demand from China, which in turn has led to a slump in prices for raw materials.