UPDATE 1-DuPont puts cyanide business on the block-sources
NEW YORK Jan 29 (Reuters) - DuPont is exploring the sale of its cyanide business and has hired investment bank Morgan Stanley to run the sale process, according to three sources familiar with the matter.
The unit - which sells the poisonous chemical for use in gold mining - could be worth more than $700 million, according to two of the sources. It is projected to have earnings before interest, taxes, depreciation and amortization of around $100 million, the sources said.
The 210-year-old chemical company is under pressure to focus more on its food and agriculture products. It sold its car paint unit last August to Carlyle Group LP for $4.9 billion in cash.
DuPont Chief Executive Ellen Kullman is betting drought-resistant AquaMax corn seed, Curzate potato fungicides, Amylex beer enzymes and other food and agriculture products will make DuPont's profit less subject to the ebbs and flows of its commodity chemicals business, which include its cyanide unit and its much larger paint business.
DuPont declined to comment. Morgan Stanley did not immediately respond to requests for comment.
Cyanide is used to leach gold and copper from rock. The process requires huge amounts of the chemical and is one of the most popular ways to extract various precious and base metals from rock ore. More than 2 billion pounds of cyanide are produced annually in North America.
AngloGold Ashanti, for instance, filters the chemical through a pile of mined ore at its Cripple Creek, Colorado, mine. The liquid is collected after filtering, and gold is skimmed off the top. Visitors to the mine are required to sign waivers promising not to touch or drink cyanide.
Cyanide was used as a chemical weapon in World War One and is also found in pesticides and some plastics. Mexichem is a key DuPont competitor.
Sales of cyanide, which DuPont makes at a Memphis, Tennessee facility, were "robust" in the first quarter of last year, executives said at the time. And amid a disappointing third-quarter 2012 earnings report last October - when more than 2 percent of the company's workforce was laid off - DuPont singled out sales of cyanide as one of its "bright spots." [ID: nL1E8LN1U8]
Shares of DuPont were down 13 cents, or 0.3 percent, at $48.02 in late afternoon trading on the New York Stock Exchange.