DBRS Comments on Anglo American’s $0.9 Billion Sale of Grinding Media and Steel Products Businesses

DBRS notes that Anglo American plc (Anglo or the Company) has announced an agreement to sell its Moly-Cop and AltaSteel business units to OneSteel Limited (OneSteel) on a debt- and cash-free basis for a total consideration of approximately $932 million. DBRS views the sale of these assets as a positive development for the Company as it seeks to realign its operations with a greater focus on its core commodity businesses. The loss of earnings to the Company is not expected to be material. In addition, the expected reduction in Anglo’s leverage is welcomed as the Company seeks funding for expansion expenditures in other areas of its business. Anglo continues to face significant project development risks and the sometimes-challenging operating environment in South Africa. Accordingly, although the sale of Moly-Cop and AltaSteel assets is considered a positive development, no rating action is contemplated upon its completion.

Anglo indicates that under the agreement to sell Moly-Cop and AltaSteel, economic interest in the businesses will pass to OneSteel effective July 1, 2010. Completion of the transaction is conditional on antitrust clearance in Canada and will undergo regulatory review in Australia and Brazil. Anglo plans to continue is divestment program with the sale of similar downstream assets such as the Scaw Metals Group based in South Africa.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The applicable methodology is Rating Mining, which can be found on our website under Methodologies.