Anglo American will use the $1 billion (around R19bn) cash from the disposal of its steelmaking coal mines in Australia to strengthen its balance sheet as it forges ahead with a new strategy focusing on copper, premium iron ore and crop nutrients.
Other assets being disposed of or divested out of under the strategy include Anglo American Platinum, De Beers, among others.
Anglo American, whose shares traded 1.28% weaker at R546.92 in afternoon trade on the JSE on Wednesday, is in line for a $4.9bn windfall from the disposal of its steelmaking coal operations.
Last year, the company reached an agreement to spin off some of its Australian steel-making coal assets to United States-listed Peabody Energy for $3.77bn.
On Wednesday, Anglo American announced the completion of the sale of the 33.3% minority interest it holds in Jellinbah Group, a joint venture that owns a 70% stake in the Jellinbah East and Lake Vermont steelmaking coal mines.
Zashvin, an existing Australian shareholder in Jellinbah, snapped up the 33.3% disposed of by Anglo American for about $1bn.
Duncan Wanblad, CEO of Anglo American, said the transaction had been completed earlier than anticipated.
“We are pleased to complete this first step in the divestment of our steelmaking coal portfolio, realising $1bn of cash proceeds sooner than expected, further strengthening our balance sheet,” said Wanbald.
He added that Anglo American had “also made good progress towards the completion of the sale of the balance of (its) steelmaking coal portfolio” to Peabody for additional cash consideration of up to $3.8bn.
“We have moved at pace to simplify Anglo American to create an exciting and differentiated investment proposition focused on our world-class copper, premium iron ore and crop nutrients businesses,” said Wanbald.
The newer portfolio was earmarked to be “more cash generative” and offering higher margins as well as greater through-the-cycle resilience.
There was also the benefit of “significant high quality and well sequenced growth options across each product vertical, including a clear path to increase annual copper production to more than one million tonnes” over the next decade.
Anglo American expects to complete the demerger of Anglo American Platinum by mid-2025 while the group has also “seen strong interest” for its nickel business, with “the sale process well progressed” now.
Through all this restructuring, Wanbald said Anglo American had also made progress to deliver $1bn in cost savings. It had also made plans for an additional $800 million in pre-tax recurring cost benefits on a run-rate basis from the end of 2025.
On completion of the restructuring, Anglo American believes that it will be able to “offer a highly differentiated investment proposition supported by strong cash generation and the capabilities and longstanding relationship networks that can deliver” full potential.
BUSINESS REPORT