Anglo American to sell nickel business for up to $500m

Anglo American said on Tuesday it will sell its nickel business to a unit of Hong Kong-listed MMG for up to $500m (R9.2bn) as a broader restructuring aimed at refocusing its operations on copper and iron ore mining is well under way.

The nickel business includes two ferronickel and two greenfield projects in Brazil.

Anglo will get $350m (R6.4bn) at completion, up to $100m (R1.8bn) in a price-linked earnout and a contingent $50m (R921m) in cash for the potential development of the projects, it said.

The assets together produce about 38,000 metric tons of nickel per year. The metal's price reached a four-year low in January as supply soared in top producer Indonesia.

In May London-listed Anglo American rebuffed a $49bn (R902bn) hostile bid from the world's biggest miner BHP which was focused on Anglo's copper assets. 

“We are unlocking the inherent value of all of Anglo American as we create a much simpler, more resilient and agile business that will enable full value transparency in the market,” said CEO Duncan Wanblad .

As part of its restructuring, Anglo sold its coal assets for about $4.9bn (R90bn) and plans to divest its De Beers diamond unit.

Ahead of its financial results on February 20, Anglo this week also said the spin-off of its platinum unit in SA will be completed by June.

Anglo American Platinum will pay an additional $856m (R15.7bn) cash dividend before its planned spinoff into a standalone unit, it said on Monday. The payout is despite annual profit slumping 40% to about R8.4bn as lower platinum-group metal (PGM) prices continue to squeeze earnings.

Johannesburg-based Amplats said the R15.7bn cash payout is in addition to a final dividend of R3 per share, or about R800m, ahead of its plan to demerge from parent company Anglo American.

Amplats will pay the additional dividend from its net cash reserves of about R17.6bn, CEO Craig Miller said on a call with journalists.

CFO Sayurie Naidoo said the company can afford the extra payout without compromising its liquidity position.

“All our assets are cash generative and therefore we expect by the end of the year we will be in a cash neutral position,” she said.

“We have modelled this on different price scenarios and we believe we will be able to execute on our strategy.”

Amplats would continue to benefit from demand for PGMs mostly from automakers as the rollout of battery electric vehicles, which do not use the metals, slows down, Miller said.

SA PGMs have also scaled back investing in new mines, which could result in future supply tightening, Miller said.

“There will be continued demand for our metals and through the assets we have we will be able to supply into that,” he said.

The platinum miner is due to be spun off from the London-listed group by June, part of a restructuring strategy implemented by Anglo American after fighting off the takeover bid from bigger rival BHP last year. Anglo will maintain a 19.9% stake in the demerged unit and gradually manage its exit over time, but will have no presence on the Amplats board, it said.

Retaining the stake could also help manage “flowback issues”, RBC Capital market analysts said.

They said: “This should help with the possible flowback issues on the stock, particularly from passive index holders of Anglo American that would mechanically be selling the shares post demerger.”