Anglo American, one of the world’s largest mining groups, plans to reduce its shareholding in gold miner AngloGold Ashanti in order to give it more flexibility to pursue its own strategic agenda, the company said on Wednesday.
It may also opt to establish pulp and paper group Mondi as an independent business in order to maximise shareholder value, given the different characteristics of the paper and packaging and mining businesses.
The moves come as part of a rationalisation and simplification of Anglo American’s portfolio and structure, as well as an increasing focus on controlled mining businesses.
Meanwhile, AngloGold confirmed it has also decided to sell its 79,5% interest in Highveld Steel and Vanadium, another listed subsidiary.
The company also pledged to return surplus capital, up to an amount of $1-billion, to shareholders during the course of 2006 via either a share buyback and/or a special dividend.
Regarding AngloGold Ashanti, in which it has a 51% interest, Anglo American said it will no longer seek to retain it as a subsidiary. Although it will reduce its stake in the gold miner, it still intends to remain as a “significant” shareholder in the company over the medium term.
Anglo American will continue to invest in growth projects in its core mining business — platinum, diamonds, coal, base metals and iron ore — and will continue to evaluate acquisition opportunities in the mining sector.
Regarding Mondi, Anglo American said it “may become appropriate in the future to establish Mondi as an independent business”. It will continue to support its growth opportunities, while “retaining flexibility in respect of future strategic options”.
As for listed sugar subsidiary Tongaat Hulett, its board has been requested to examine ways of unlocking greater value for all shareholders.
At the same time, management at Anglo’s industrial-minerals division, Tarmac, has been tasked with improving returns on capital by turning around, restructuring or divesting underperforming parts of the portfolio and pursing further growth opportunities in its core business.
Commenting on Anglo Platinum, Anglo American said it represents a “key differentiator” from its peers and is core to the group’s mining portfolio.
“Anglo Platinum is uniquely positioned, as the market leader and with an extensive resource base, to take advantage of increasing demand and to drive long-term growth.”
A major area in which shareholder value can be grown at Anglo Platinum is improved operating cost-efficiency and project delivery. Anglo American is exploring how growth and investment can best be supported alongside an appropriate black economic empowerment transaction at Anglo Platinum, the group noted.
Tony Trahar, CEO of Anglo American, said: “This announcement marks a further step in Anglo American’s ongoing strategic development. Through a series of measures we are creating a more focused mining group, better positioned to take advantage of opportunities in our main mining businesses.”
The company’s key capital-management objective was to maintain its “A” credit rating through the cycle, while retaining balance-sheet flexibility to pursue further growth opportunities. The company’s strong cash flows from operations will enable it to pursue its $5-billion capital-expenditure programme and consider further growth projects, it added. — I-Net Bridge