In its strategic review published last autumn, the large international mining group Anglo American took a close look at its non-mining interests and decided to sell its stake in Highveld Steel and to prepare for the likely divestment of its paper and packaging business, Mondi, among other things an important producers of cement sacks.
The reported appointment of merchant banks to handle the divestment of not only Mondi and Highveld Steel but also AngloGold Ashanti highlights the question mark over the group’s construction materials interests.
According to the strategic review, the future of its industrial minerals business, dominated by Tarmac, would be assessed in relation to investment opportunities in the mining industry. The industrial minerals division generated an EBITDA of US$624m in 2004, which compared with US$7,110m for the whole of the Anglo American group. By comparison, Mondi contributed US$996m and all the remaining 77% came from mining and metals.
The industrial minerals division produced a trading profit 6.5% higher at US$346m in 2004, of which Tarmac contributed 81% and the Brazilian fertiliser business, Copebrás, 19%. The 73% owned Copebrás is one of the three main phosphate producers in Brazil, with one mine and two processing plants. Tarmac is essentially a construction materials business involved mainly in aggregates, ready-mixed concrete, concrete products and road surfacing in Europe. Having recently sold a small ready-mixed concrete business in India to the local cement producer The Associated Cement Companies, its remaining interests outside Europe are in the United Arab Emirates and Oman, Al Futtam Tarmac, with the Buraimi quarry in Oman producing in excess of eight million tonnes of aggregates per annum, and smaller operations in China.
If the industrial minerals business is being disposed of, either as a demerger creating a sizeable international aggregates company with some cement interests, or as a series of trade sales, it is likely to generate plenty of interest. The Spanish and the Czech businesses are likely to attract particular attention from a number of cement producers, while the market share of the British operations is likely to preclude the acquisition by any company already a sizeable presence in the aggregates market there. Whether the businesses will be put up for sale is likely to depend on whether or not the present owner can find more promising investment opportunities in the mining sector.