Anglo HAS PLAN To head off XSTRATA

ANGLO American is studying a plan to raise R19,8billion from the sale of a 50percent stake in its Brazilian iron ore operations as part of its defence against an unwelcome merger approach from Xstrata, a rival miner.

ANGLO American is studying a plan to raise R19,8billion from the sale of a 50percent stake in its Brazilian iron ore operations as part of its defence against an unwelcome merger approach from Xstrata, a rival miner.

Anglo chief executive Cynthia Carroll is under pressure to come up with a strong set of proposals to fend off Xstrata - and to win over restive board members and shareholders.

The sale of the Brazilian iron ore assets could prove a popular move.

Anglo bought them at the height of the commodities boom last year, only to see ore prices tumble as demand in the steel market slumped.

Chinese state-backed companies Chinalco and Minmetals are potential buyers.

Anglo is also exploring other disposals as part of its defence against Xstrata, which made an unsolicited, all-share merger proposal 10 days ago.

Combining the companies would create a global mining group with a turnover of more than R400billion.

Anglo's board flatly rejected Xstrata's approach last week, saying that there was little strategic advantage in the deal and that "irrespective of this lack of strategic merit, the terms proposed by Xstrata were totally unacceptable".

Anglo has stepped up the search for a new chairman as it looks to build its defences against Xstrata's unwelcome approach and demonstrate its case for remaining independent.

The shareholders have demanded that the miner's conservative leadership is strengthened and that the company increases shareholder value.

Jim Leng, who recently stepped down as chairman of Rio Tinto after a board row, has been put forward as a potential candidate to succeed Mark Moody-Stuart, who has already announced his intention to step back.

Sir John Parker, chairman of National Grid, has also been sounded out.

So too have Niall FitzGerald, deputy chairman of Thomson Reuters, and Paul Anderson, a board director at BHP Billiton, who was one of two people shortlisted for the BP chairmanship.

Meanwhile, Xstrata, headquartered in Switzerland and listed in London, is understood to have told the South African authorities that it will retain a listing there if the merger goes ahead. Anglo has many of its most valuable mines in South Africa and has a dual listing there and in Britain.

Earlier this week Mining Minister Susan Shabangu described the proposed deal as "uncompetitive and unhealthy" for the country, where the government says 25000 jobs have been lost as a result of a 40percent fall in commodity prices. - The Sunday Times, London

X