Anglo American, whose chief executive Mark Cutifani is reviewing assets to divest non-performing businesses, may announce at least nine more mines for sale, according to Standard Bank Group.
Anglo, which reports first-half earnings on Friday, has said it seeks to improve return on capital to at least 15% by 2016 from about 8% in June 2013. Cutifani has said he would consider disposing of assets that pull down the average.
“It is likely that a divestment program will be announced for the Tier-3 assets that Anglo is unable to turn around,” Tim Clark, head of mining and metals research at the bank, said in a note to investors dated Wednesday. “In May, Anglo outlined 31 Tier-3 operations and described these as ‘cash or don’t carry.'” A spokesperson for Anglo in London declined to comment.
Anglo on July 21 put four platinum mines and potentially two joint ventures in South Africa up for sale after agreeing on July 7 to divest its 50% stake in Lafarge Tarmac to joint venture partner Lafarge SA for at least $1.5-billion.
The company may sell nine further assets, according to Johannesburg-based Clark. They include metallurgical coal mines Callide and Foxleigh in Australia and the Kleinkopje thermal coal mine in South Africa, Clark said. In its diamond operations, the company may sell Voorspoed and Kimberley Mines in South Africa and Snap Lake in Canada, he said.
Anglo is seeking to divest its nickel business by selling the Barro Alto and Codemin mines in Brazil, according to the note. Manto Verde copper mine in Chile and some unapproved and undeveloped projects are also for sale, Clark said.
“We see this possible announcement as shoring up the balance sheet in the short term and focusing capital allocation on higher returning opportunities in the medium and longer term,” he said.
Out of 69 assets in the sprawling company, 31 are delivering just 2% of earnings before interest and taxes, Cutifani said in a May interview. The new management team has seen signs of improvement in 15 of the 31 assets in the past year, while 16 of them “still have a lot of work to do,” Cutifani said.