LONDON (Reuters) - Global mining group Anglo American AAL.L said on Thursday it had agreed to sell its niobium and phosphates businesses to China Molybdenum for $1.5 billion (1.03 billion pounds) in cash to reduce its debts.
The group is selling parts of its business in a sweeping strategic overhaul to cope with a commodities rout that has triggered a fight for survival even among heavyweight miners.
“The proceeds from this transaction ... will enable us to continue to reduce our net debt towards our targeted level of less than $10 billion at the end of 2016,” Anglo’s Chief Executive Mark Cutifani said in a statement.
The niobium and phosphates businesses consist of mines, plants, processing facilities, chemical complexes and deposits and are located in Brazil.
Analysts said that on first sight, it was a good move for Anglo American.
“I believe it’s very significant for Anglo and a higher price than the market expected,” Jeremy Wrathall, analyst at Investec said.
The deal is subject to certain approvals and is expected to close in the second half of the year.
Niobium is a component of the high-strength steels used for cars, ships, high-pressure pipelines and infrastructure across the petroleum and construction industries.
Phosphate can be used for coating steel and for fertiliser.
Reporting by Sarah Young and Barbara Lewis; Editing by Susan Fenton
Our Standards: The Thomson Reuters Trust Principles.