Anglo American has completed the sale of its nickel business for up to $500 million in cash as part of its ongoing efforts to reshape the company following its rejection of a £39 billion takeover bid from BHP last year.
The miner announced on Tuesday that it has reached an agreement to sell its nickel assets, located in Brazil, to MMG Singapore Resources, a subsidiary of China-backed MMG. The sale deal includes an upfront payment of $350 million, with the possibility of additional payments up to $100 million in semi-annual installments over the next four years, contingent on sales exceeding an agreed nickel price. An additional $50 million could also be earned based on final investment decisions for projects currently in development.
This move follows the announcement just a day before that Anglo would receive a $600 million dividend boost, ahead of the spin-off of its platinum division. Anglo American Platinum, the world’s largest platinum producer, is set to list in London after June, while continuing to trade on the Johannesburg Stock Exchange.
Shares in Anglo American, which have seen a rise of 40% over the past year, increased by 0.4% in early trading on Tuesday.
The nickel sale is a key step in Anglo’s plan to streamline its operations, focusing more heavily on its copper and iron ore businesses while divesting from other sectors, including diamonds and platinum. This shift aligns with the company’s strategy to become more focused on premium metals that are central to the future of the economy, such as copper, used extensively in electric vehicles, and iron ore, which is vital for the construction industry.
Nickel, a key component in the production of lithium-ion batteries for electric vehicles, as well as in smartphones and stainless steel, has faced significant market challenges. In recent years, the industry has been shaken by a 2022 short squeeze and the rapid expansion of mining operations in Indonesia, which has led to major shifts in the market. Prices, which peaked above $100,000 per tonne in 2022, have since dropped back down to around $16,000 per tonne.
Anglo American had previously written off $800 million in relation to its Barro Alto nickel mine in Brazil, due to the declining prices, forcing some operators to close mines or consider selling their assets.
Many nickel producers in Indonesia are Chinese-owned, with analysts warning that their lower production costs have made it increasingly difficult for Western miners to compete.
Duncan Wanblad, Chief Executive of Anglo American, commented on the deal, saying, “This deal marks a further important milestone towards simplifying our portfolio to create a more highly valued copper, premium iron ore, and crop nutrients business.”
Cao Liang, Chief Executive of MMG, added that the Brazilian nickel assets represented “an important diversification for our business.” MMG’s largest shareholder is China Minmetals, a state-owned enterprise in China.
This sale is just one part of Anglo American’s broader strategy to refine its portfolio and focus on areas that align with future growth trends in global industries, particularly those linked to the green energy transition.
