Anglo Says Rising Commodity Prices Lift South Africa Sales Value

  • Producer committed to exiting assets to refocus business
  • Company in position to do ‘innovative things’ on ownership

The rally in prices of commodities that Anglo American Plc wants to exit has no impact on the century-old producer’s plan to refocus its business and will enable it to sell assets for more money, the executive overseeing the strategy said.

Prices of iron ore, coking and thermal coal have rebounded this year. In February, Anglo announced a plan to shrink its business by putting assets that produce these commodities on the chopping bock. Rising prices have eased the pressure on Anglo as it seeks to cut net debt to less than $10 billion and focus on more profitable diamond, platinum and copper mines.

“The reason why we decided to sell was not just simply how much cash you can bring in,” said Norman Mbazima, who is deputy chairman of Anglo’s South African operations and is managing the sales plan. “It was which commodities do we want to be in? Which have long-term attractiveness? Those reasons have not changed as a result of changes in the price. We continue with the program. What does change is your views on value. You can be a bit more of a prima donna.”

Anglo announced the sale of its thermal-coal assets in South Africa in 2014, adding all coal and iron-ore operations to that this year. The company has evaluated a second round of bids and will shortly go into a third, “which hopefully will be the final round,” Mbazima said.

Assets that Anglo is exiting include Kumba Iron Ore Ltd., which is Africa’s biggest producer of the steelmaking material, and its manganese operations.

Empowerment Contribution

If Anglo does sell, South Africa’s government is keen to support “new black economic empowerment champions,” Mineral Resources Minister Mosebenzi Zwane said in February. Zwane wants to increase black ownership of the mining industry, which formed the bedrock of the economy under white-minority rule that ended in 1994.

“Anglo American is fully empowered as of today -- we would like to see that after we’ve done our deals, we haven’t eroded that empowerment, we haven’t made it worse, we’ve made it better and we’ve geared it up for the future,” Mbazima said. “We’re in an area where we can do innovative things going forward in terms of the empowerment sector. We would like to make sure it’s a deal that works for everybody.”

Before it's here, it's on the Bloomberg Terminal.