[miningmx.com] – ANGLO American put the finishing touches to the sale of its Tarmac business after divesting of Tarmac’s Middle East operating joint ventures to
a subsidiary of Bouygues Group, the French industrial company.
Anglo announced in July that it would sell its 50% stake in Tarmac to Lafarge for $1.6bn – a valuation above expectations.
The transaction today sees Bouygues company Colas SA buy Tarmac joint ventures in the United Arab Emirates, Oman and Qatar. “The sale to Colas of an additional non-operating joint venture entity in Oman is pending satisfaction of certain outstanding conditions,” said Anglo in an announcement.
There is scepticism, however, that Anglo American will be able to see the sale of some 30 to 35 of its other businesses at the same level of success, especially given the deterioration in the commodity market.
Following the likely sale of its Rustenburg Platinum Mines, Anglo American guided to some $2bn worth of disposals in 2016/17 consisting of its niobium and phosphates division, as well as its Australian and South African thermal coal assets.
Using an industry multiple, HSBC calculated that Anglo would try to get the niobium and phospates assets away for $400m and $500m respectively. It added, however, that “… the weak market backdrop may delay the potential sale or severely depress sale value”.
“Similarly, Australian and South African coal assets are unlikely to attract generous valuations, and as such we view the targeted disposal proceeds as a stretch,” the bank said in a report.
A “firesale” at Anglo’s Kumba Iron Ore was also expected by HSBC if iron ore prices were to fall lower amid “financing pressures’, it said.
Anglo American said last year that Kumba Iron Ore may well test covenants with lenders if market prices were to persist and it failed to lower its break-even. Anglo would not have the appetite to put more capital into the company, said HSBC.
“Given the cost profile and challenging operating environment for Minas Rio, we think Anglo would consider any bids though we struggle to identify buyers,’ it said of Anglo’s Brazilian operation, the value of which it had written down.
Barclays Capital sounded a slightly more optimistic note on Anglo, however, based on the fact the share had heavily under-performed which, in turn, was “starting to offer a glimmer of support from valuations”.
“However we are staying underweight given that commodity price risk still remains to the downside, in our view, and the prospect of a significant capital raising cannot be ruled out in those circumstances,” it said.
