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FACTBOX-Major mining assets change hands after commodity rout
December 14, 2016 / 5:37 PM / a year ago

FACTBOX-Major mining assets change hands after commodity rout

Dec 14 (Reuters) - Major miners this year have sold assets and bolstered their balance sheets after a global commodities rout last year left them with high levels of debt.

A recovery in raw materials prices has eased the pressure to sell, as well as raising the price of any deal and transactions have slowed.

China, whose stimulus package spurred this year’s commodities rally, is the biggest potential buyer.

Following is a list of the main mining companies, some of the biggest sales so far and what assets are on offer:

BHP BILLITON LIMITED

Market capitalisation: 77.7 billion pounds ($99 billion)

Net debt: $26.1 billion (company reported in August)

Share price movement this year: up 78 percent (to close of business on Dec. 14)

In 2015, it span off South32 to focus on its core business.

The world’s largest exporter of metallurgical coal, BHP sold its coal assets in Indonesia to partner Adaro Energy for $120 million.

Together with Exxon Mobil Corp, BHP Billiton said it is considering selling depleting energy assets in Australia, including Kingfish, the country’s largest discovered oilfield.

It has agreed to sell half of its stake in the Scarborough area gas fields off Western Australia for $400 million.

Sources say BHP may also be seeking to buy some coal assets from Anglo American.

RIO TINTO PLC

Market capitalisation: 59 billion pounds

Net debt: $12.9 billion (company reported in August)

Share price movement this year: up 60 percent

Rio has been seeking to offload less profitable businesses.

Last year, it agreed to sell its 40 percent stake in the Bengalla coal mine in Australia to New Hope Corp for $606 million.

In January, it agreed to sell its Mount Pleasant thermal coal to Salim Group’s MACH Energy Australia for $224 million.

Rio Tinto has also been running an on/off process to sell its Hunter Valley assets although no deal has been struck.

The miner is shifting its emphasis to copper and said it will no longer fund major expansions in iron ore as that market reaches saturation.

At the end of October, it signed a deal to sell its stake in Guinea’s Simandou iron ore project to Chinalco for between $1.1 billion and $1.3 billion depending on the timing of the project’s development.

GLENCORE PLC

Market capitalisation: 41 billion pounds

Net debt: $23.4 billion (company reported in August)

Share price movement this year: up 209 percent

Glencore said at the start of December it was on track to cut its debt to between $16.5-$17.5 billion and had achieved assets sales of $6.3 billion.

Also in December, it announced its first major acquisition since the sell-off began as it used 300 million euros of its own equity to acquire a stake in Russian state oil giant Rosneft .

Following the deal, analysts said Glencore’s investment was low, it was getting 220,000 barrels per day (bpd) to trade and the acquisition was in tune with its concern for an investment-grade balance sheet.

Glencore’s disposals this year include selling just under half of its agricultural business to two Canadian funds for $3.125 billion. At the same time, it shifted $3.6 billion in debt over to Glencore Agri.

Glencore is also considering selling its Vasilkovskoye gold mine in Kazakhstan, worth more than $2 billion, sources close to the deal said.

In August it announced it was selling a 30 percent stake in its Ernest Henergy copper mine in Australia as well as all the gold produced as a byproduct.

Glencore is seeking to sell its Cobar copper mine in Australia.

It has abandoned plans to sell its Lomas Bayas mine in Chile.

But together with Origin Energy it has put its hydropower business Energia Austral in Chile up for sale, two people familiar with the process said.

In October, it agreed to sell its Australian coal haulage business GRail to Genesee & Wyoming Inc for A$1.14 billion ($874 million).

VALE SA

Market capitalisation: 142 billion Brazilian reais

Net debt: $27.5 billion (company reported in July)

Share price movement this year: up 144 percent

The Brazilian miner has been hit with charges to cover and repair damages after the Samarco dam collapsed at its iron ore mine last year.

The world’s biggest iron ore miner has been in talks with Fortescue Metals Group that could see Vale taking a minority stake in the Australian company and blending their iron ore operations to win market share in China.

Vale has also handed its stake in Brazil’s CSA steel plant to majority owner Germany’s ThyssenKrupp AG for a token sum.

At the start of July, it said it had sold three of its giant “Valemax” iron ore ships to a group led by Industrial and Commercial Bank of China for $269 million. It is also seeking to sell other Valemax ships, also known as Very Large Ore Carriers.

ANGLO AMERICAN PLC

Market capitalisation: 16.6 billion pounds

Net debt: $11.7 billion (company reported in July)

Share price movement this year: up 302 percent

The miner is aiming to cut its debt to $10 billion by selling $3-4 billion of assets in 2016, including its iron ore, coal and nickel units.

At the height of last year’s commodity slump, it said it would speed up a strategy to reduce the company to a handful of core assets and said it would review its Minas-Rio iron ore project in Brazil after three years.

In theory, the miner is still a seller, but only at the right price and a surge in the coal market halted at least one deal.

So far, Anglo American has sold its niobium and phosphate businesses in Brazil to China Molybdenum for $1.5 billion.

It also sold its stake in Australia’s Foxleigh metallurgical coal mine to a consortium led by Taurus Funds Management for an undisclosed price.

In July, Anglo American’s De Beers unit said it was selling its Snap Lake diamond mine in Canada after suspending operations at the unprofitable mine last December.

Anglo is also seeking to sell nickel assets in Brazil, including the Barro Alto and Codemin mines, although offers so far had been too low to lead to a deal, sources have said.

In December, it sold a 9.7 percent stake in South African miner Exxaro.

FREEPORT-MCMORAN INC

Market capitalisation: $20.5 billion

Net debt: $17.9 billion (results presentation in October)

Share price movement this year: up 121 percent

Freeport-McMoRan said in October it did not expect to sell any more mining assets but may offload more of its oil and gas business.

It could cut its net debt to as little as $10.5 billion by the end of 2017 on already executed asset sales and cash it expects to earn from higher mined volumes and metals prices, its chief executive said in July.

The company has agreed to sell its majority stake in the Tenke Fungurume copper project in the Democratic Republic of Congo to China Molybdenum Co Ltd for $2.65 billion in cash. Freeport has an effective 56 percent interest in Tenke, one of the world’s largest copper-cobalt deposits.

In October, it said it was selling its onshore California oil and gas assets to Sentinel Peak Resources California for up to $742 million.

In September it said it was selling its deepwater Gulf of Mexico oil and natural gas assets to Anadarko Petroleum Corp for $2 billion.

In February, it sold a 13 percent stake in the Morenci open-pit copper mine to Japan’s Sumitomo Metal Mining for $1 billion.

ANTOFAGASTA PLC

Market capitalisation: 7.3 billion pounds

Group net debt: $1.04 billion (company reported in August)

Share price movement this year: up 53 percent

In July, the Chilean copper miner paid Barrick Gold Corp $1 billion for 50 percent of the Zaldivar copper mine in Chile, an asset once dubbed the “Andean ATM”.

Antofagasta posted a slim rise in mid-year profit in August, but has been struggling to meet copper output targets from its existing assets.

FIRST QUANTUM MINERALS LTD

Market capitalisation: C$10.2 billion ($7.8 billion)

Net debt: $4.1 billion (results presentation in July)

Share price movement this year: up 184 percent

The Canadian miner sold Finnish mine Kevitsa to Boliden in March, with the Swedish group paying $712 million. The company had been seeking to reduce its debt levels by more than $1 billion.

First Quantum said in April the uncertainty regarding its ability to meet the net debt to EBITDA ratio covenant under its debt financing agreements had been removed. ($1 = 0.7876 pounds) ($1 = 3.2007 Brazilian reais) ($1 = 1.3045 Australian dollars) ($1 = 1.3128 Canadian dollars) (Updated by Barbara Lewis in London, editing by David Evans, editing by David Evans)

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