Anglo American, the FTSE 100 giant, is considering selling a stake in a major iron ore mine in Brazil to prove the value of the company's key assets.
It is understood that the board, led by Cynthia Carroll, is frustrated that the iron ore project, which requires more than $5bn of capital expenditure – and, to a lesser extent, Anglo – is undervalued by the market. Over the past 18 months, Anglo has sold off a series of assets to streamline the group and show that it will develop its core holdings.
By selling a minority stake of 25 to 49 per cent in Minas-Rio, Anglo can show, in effect, what the asset is worth. It is thought that Japanese commodities players have asked about purchasing the stake.
Anglo is understood to be trying to decide whether it has impressed the market enough with its existing divestment programme. If not, Ms Carroll will press ahead with a stake sale.
It is believed that Anglo's regular advisers, UBS and Goldman Sachs, are considering the merits of the sale, which would fetch several billion dollars. Nomura, the Japanese investment bank, is also thought to be involved.
"This is a price validation exercise," said a mining source. "This has been on the cards for a long, long time."
A spokeswoman for Anglo said: "We have discussed the option to introduce a partner into the Minas-Rio project on many occasions over the past few years and we continue to explore a range of options for the project that are in the best interests of our shareholders."
The mining sector is under the spotlight at the moment, due to last month's flotation of the commodities giant Glencore.
Last week some analysts criticised the Swiss-based group as already being overvalued. Nomura said it was "expensive relative to its peers".Reuse content