US-based Mosaic Co, the world's top producer of phosphate fertilizer, Switzerland's Eurochem and iron ore and nickel giant Vale SA together with private equity firm Apollo Global have been picked to make final bids for Anglo American's niobium and phosphate business in Brazil reports Bloomberg.
The Brazilian operations could fetch as much as $1.5 billion according to the report. BHP Billiton spin-off South32 and X2 Resources, the private equity firm founded by former Xstrata chief Mick Davis were earlier said to also be in the running. X2 is yet to make a major investment despite having raised $5.6 billion a couple of years ago.
X2 was also said to have been among the firms bidding for two Anglo American copper mines in Chile in August last year. The open-pit Mantos Blancos and Mantoverde mines went to two private equity firms Audley Capital and Orion Finance for $300 upfront. X2 was also outbid on a 50% stake in Barrick Gold's Zaldivar copper mine in Chile which the Toronto company sold to Antofagasta for $1 billion in cash.
There are many other assets of the more than 100-year old company Davis may take a swing atDavis' cautious approach with X2 is somewhat uncharacteristic. Davis built Xstrata over less than a decade through a series of billion dollar transactions into a company with 70,000 employees in 20 countries. Xstrata's market value peaked in 2008 at $85 billion.
But even before then Davis was a formidable dealmaker who with fellow South African Brian Gilbertson created Billiton. Davis left for Xstrata after Billiton was sold to BHP in 2001 (Gilbertson moved into emeralds of all things).
Davis would be very familiar with Anglo's business and there are many other assets of the more than 100-year old company Davis may take a swing at. In February, Anglo upped its target for the amount of money it wants to raise from disposals, to $5bn-$6bn by the end of 2016.
Earlier in April, Anglo sold its 70% stake in the Foxleigh coking coal mine in Queensland, Australia and its German Creek and Moranbah North met coal mines in the country is also up for sale as part of a program to exit the sector entirely.
Anglo also plans to extract itself over time from its iron ore business, including the 26 million tonne per year capacity Minas-Rio project in Brazil (2015 output was less than 10mt) and its 45 million tonne Kumba unit in South Africa. Anglo is the world's fifth largest iron ore producer in terms of output although it may fall in the rankings once Australia's Roy Hill mine ramps up to full production.
While copper and coal is definitely in Davis's wheelhouse, Xstrata never entered the iron ore business. And despite the 2016 rally in the price of steelmaking raw material, the iron ore market is expected to remain in oversupply for at least the next two years.