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Norilsk sheds African assets in $337m deal

Norilsk sheds African assets in $337m deal

Photo by Bloomberg

20th October 2014

By: Natasha Odendaal

Creamer Media Senior Deputy Editor

  

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JOHANNESBURG (miningweekly.com) – Norilsk Nickel is set to sell its African assets to Botswana-based mining company BCL for $337-million, as the Russian miner’s newly adopted strategy to shed all international assets moves forward.

The parties on Monday announced the conclusion of definitive transaction agreements that would see the transfer of Norilsk’s 50% participation interest in the Nkomati nickel and chrome mine, in South Africa, and its 85% stake in the Tati Nickel Mining Company, in Botswana, to BCL.

The deal marked Norilsk's full exit from all the international assets it had identified as non Tier-1 mining operations when the company embarked on a new strategy last year.

"The sale of the African operations marks a major milestone in our commitment to deliver on [our] new corporate strategy. The transaction is in line with our goal of releasing capital from noncore assets and will have a positive impact on the company's return on capital, as well as [on] shareholder returns,” explained Norilsk first deputy CEO Pavel Fedorov.

The corporate strategy targeted the exit from several international assets by the end of 2016, while narrowing focus to nickel and the associated copper and platinum-group metals and the exploitation of the “full potential” of its Russian resources.

The company had already sold off several of its Australian mines, including the Thunderbox and Bannockburn gold mines, the Waterloo nickel mine, the Avalon, Cawse and Black Swan nickel operations and the Lake Johnston nickel project.

The latest sale would see BCL assume responsibility for all attributable outstanding debt and environmental and rehabilitation liabilities associated with each African asset, with the agreed deal structure envisaging the assignment of the Nkomati concentrate offtake agreement from Norilsk subsidiary Metal Trade Overseas (MTO) to BCL.

Through MTO, Norilsk would enter into a matte offtake agreement with BCL, whereby the matte would be supplied for processing to Norilsk's Harjavalta refinery in Finland.

“The assignment of the Nkomati concentrate agreement and entering into the matte agreement with BCL are in line with Norilsk's new downstream production reconfiguration strategy,” the company said in a statement.

BCL indicated that the deal could significantly optimise its own operations, as concentrate from both Tati Nickel and Nkomati could be treated at BCL's smelter in Botswana.

Further, the acquisition of Norilsk’s interest in Nkomati marked the first significant investment by BCL into South Africa.

“BCL is now evolving into a regional player, with high-quality mining assets, supported by a strong metallurgical complex,” concluded BCL chairperson Dr Akolang Tombale.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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