April 7, 2010 / 12:20 PM / in 7 years

DEALTALK-Anglo American nears $1 bln-plus zinc sale

4 Min Read

(For more Reuters DealTalks, click [DEALTALK/])

* Analysts say zinc sale could fetch $1.1 bln to $1.5 bln

* Xstrata interested; Hudbay prefers American assets

* Glencore, Vedanta, Boliden also said to pursue deal

By Quentin Webb

LONDON, April 7 (Reuters) - Anglo American Plc (AAL.L) is nearing the sale of its $1 billion-plus zinc businesses, with a handful of rival miners preparing to submit binding bids later this month, people familiar with the matter said.

Anglo, under pressure from investors after an abortive merger approach from rival Xstrata XTA.L last year, is selling the mines in Ireland, South Africa and Namibia as part of a multi-billion dollar disposal and restructuring programme.

Several of the world's biggest zinc miners, including Xstrata, its biggest shareholder Glencore [GLEN.UL], and Vedanta's (VED.L) Hindustan Zinc Ltd (HZNC.BO) unit are likely to bid, two of the people said. Anglo is seeking to sell the business as a whole, they added.

A Chinese bidder may also remain in the process, two of the people said, while one said Sweden's Boliden (BOL.ST), which owns Europe's largest zinc mine, could also bid.

Analysts at BMO Capital Markets estimate the assets could fetch $1.1 billion. A more bullish Panmure Gordon says they could be worth $1.5 billion -- or about 6.4 times 2009 earnings before interest, tax, depreciation and amortisation (EBITDA).

Anglo spokesman James Wyatt-Tilby declined to comment in detail but said: "The process is advancing. There has been strong interest."

Boliden, Glencore and Xstrata declined to comment. Vedanta did not immediately respond to a request for comment.

Xstrata's top zinc executive told Dow Jones in March the group was "looking at probably all assets" in the sell-off, and was particularly interested in Anglo's Lisheen mine in Ireland.

Canada's HudBay Minerals Inc (HBM.TO), which bought a big package of assets from Anglo in 2004, may also be bidding, two of the people said. However, HudBay spokesman John Vincic said while the group did not exclude overseas deals, it was more comfortable closer to home.

"We are focused on opportunities in the Americas, and we are actively looking at various opportunities. Our preference would be to look at zinc and copper assets," he said.

Protective

The sale has benefited from a recovery in the price of zinc, used in the construction, carmaking and white goods industries as a protective coating for steel and iron.

LME zinc MZN3 has risen more than 50 percent from the $1,595 a tonne it averaged last year.

Anglo is selling the Skorpion mine in Namibia, Ireland's Lisheen and the Black Mountain mine and Gamsberg project in South Africa, in which Exxaro Resources Ltd (EXXJ.J) owns a 26 percent stake.

Bidders will have to weigh the costs and potential of the Gamsberg project: last year Anglo estimated it would require $1.93 billion of capital expenditure to bring it to full production of 400 kilotonnes per annum (ktpa) by 2018.

Another big issue is the short life of Lisheen, which generated the biggest chunk of operating profit in 2009 but has only four years of reserves remaining.

(Visit Reuters DealZone: here)

Additional reporting by Julie Crust in London, Tom Miles in Beijing, Joseph Chaney in Hong Kong, Cameron French in Toronto and Patrick Lannin in Stockholm; Editing by Erica Billingham

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below