Exxaro agrees to sell remaining 24 percent stake in Tronox

The deal ends its exposure to the mineral sands industry.

South Africa’s Exxaro Resources has agreed to cut ties with Tronox by selling its 24 percent remaining stake in the New-York-listed mineral sands producer.

Under the agreement, Exxaro will sell its 24 percent stake to Tronox or to third parties, the company announced on Tuesday.

Tronox is a global leader in the mining of titanium-bearing minerals sands and the production of titanium dioxide listed on the New York Stock Exchange.

Exxaro has been a major shareholder in Tronox since 2012 but has recently embarked on an initiative to reduce its stake in the company.  In 2017, Exxaro sold Tronox shares equal to approximately 19 percent of its shares in issue for about R6.55 billion. This sale left it with a 24 percent shareholding, which Exxaro said it intended to sell.

Exxaro said the disposal of its 24 percent interest in Tronox will enable it to “focus on core activities, fund capital commitments, repay debt and make distributions to shareholders.”

“The transactions provide Exxaro with greater certainty regarding the process and timing for Exxaro’s monetization of its interest in Tronox and its English and South African subsidiaries, whilst supporting Tronox’s intention to effect the Redomicile and manage Exxaro’s exit in an efficient way,” the company said in a statement.

Exxaro had a carrying value of Tronox UK of R1.735 billion and Tronox SA, the South African subsidiary, of R1.966 billion as at end-June 2018.

The agreement to sell its shareholding is one of several which also includes Exxaro’s support for the redomiciling of Tronox to the UK from its current Australian base. Tronox said that one of the reasons for changing address was to make it easier to buy its own shares.

Exxaro said the redomicile of Tronox and Exxaro’s disposal of its interest in the company are expected to be completed by the first half of 2019.