Anglo American agrees $500m sale of nickel business
- MMG Singapore Resources has agreed to pay Anglo $350million upfront
- The price of nickel has plunged to a four-year low of under $15,250 per tonne
Anglo American has taken another step towards simplifying its business after agreeing to offload its nickel division for up to $500million.
MMG Singapore Resources, a subsidiary of Melbourne-based mining firm MMG, has agreed to buy the FTSE 100 group's nickel operations for $350million upfront.
It will also pay Anglo up to $100million in price-linked payments and $50million, dependent on final investment decisions for the firm's two development projects.
Anglo's nickel arm includes the Barro Alto and Codemin ferronickel processing plants in Brazil, which produced 39,400 tonnes of nickel last year, as well as the Jacaré and Morro Sem Boné greenfield growth projects.
The decision to sell the business comes after the price of nickel has plummeted to a four-year low of under $15,250 per tonne, due partly to production oversupply from Indonesia and China.
Prices have been further impacted by the appreciating US dollar and a slowdown in electric vehicle demand.
Deal: Anglo American has taken another big step towards simplifying its business after agreeing to offload its nickel division for up to $500million
S&P Global Commodity Insights forecasts nickel prices remaining subdued in the coming years due to supply levels continuing to outpace demand.
Cao Liang, chief executive of MMG, said the acquisition of Anglo's nickel segment 'provides important diversification for our business and strengthens our presence in Latin America'.
The takeover is set to be finalised by the third quarter of 2025, subject to customary competition and regulatory clearances.
Duncan Wanblad, chief executive of Anglo American, said: 'Anglo American's portfolio focus, exceptional asset quality and growth options offer a differentiated investment proposition for investors.
'We are unlocking the inherent value of all of Anglo American as we create a much simpler, more resilient and agile business that will enable full value transparency in the market.'
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Anglo already intends to demerge its platinum arm and sell the remainder of its steelmaking coal division to Peabody Energy later this year as part of a restructuring.
The company has also put the iconic De Beers diamond business up for sale, although it has yet to find a buyer.
The London-based group announced plans to break up its business last May after rejecting a £39billion takeover attempt by BHP, the world's largest listed miner.
BHP wanted to acquire Anglo primarily to gain control of its $35billion copper assets, which will play an essential role in the energy transition owing to its prevalence in technologies such as electric vehicles, solar panels and wind turbines.
The deal failed due to concerns regarding its complexity, including the requirement for Anglo to divest its South African business.
Anglo American shares were 0.2 per cent up at £24.79 on Tuesday morning and have grown by around 39 per cent over the past year.
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