South32 interested in $1bn Anglo sale

London - South32, the aluminum, coal and manganese producer spun out of BHP Billiton last year, is considering bidding for Anglo American’s $1bn niobium and phosphate business in Brazil, according to three people familiar with the situation.

South32 sent out requests to investment banks as it seeks to hire an adviser to assist in the bidding process, the people said, asking not to be identified because the information is confidential.

Goldman Sachs and Morgan Stanley are managing the sale for Anglo, the people said.

First-round bids are due by the middle of next month, and Anglo is seeking to complete the sale in one transaction, rather than split the niobium and phosphate assets, they said.

Large North American fertiliser companies are also likely to participate in the auction, two of the people said. Anglo confirmed last month that it would work to sell the business this year.

South32 was created last year in the mining sector's biggest spinoff in about a decade as BHP narrowed its focus to copper, coal, iron ore and oil.

Shares of Perth, Australia-based South32 plunged 56% in Sydney trading since listing in May.

A spokesperson said the company doesn’t comment on market speculation. South32 has a strong balance sheet and will look at acquisition opportunities, Chief Executive Officer Graham Kerr said in August.

Business Update

“Our primary focus is on optimizing the performance of our existing operations and maximizing the value of those assets,” the company said in an e-mailed statement.

A spokesman for Anglo declined to comment.

The assets are among several that Anglo is trying to sell as it seeks to raise $4bn to cope with the collapse in commodities.

The London-based miner already generated about $2bn by offloading its tarmac business, two copper mines in Chile and platinum assets in South Africa.

Anglo is set to become the world’s second-largest producer of niobium, a material used in high-temperature alloys for jet engines and lightweight steel for cars, when it completes the ramp up of its $325m Boa Vista Fresh Rock plant in Brazil’s Goias state by mid-2016.

It produced 2 934 metric tons of niobium in the first half of 2015, and the business contributed $35m to earnings before interest, taxes, depreciation and amortization.

The phosphates unit had output of 513 000 tons with Ebitda of $52m.