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Apollo to Buy Xstrata Aluminum Unit for $1.15 Billion

Anglo-Swiss miner Xstrata said on Wednesday it was selling its aluminium business to private equity firm Apollo Management for $1.15 billion cash.

Xstrata acquired the aluminium business through its purchase of Canadian miner Falconbridge last year and had been conducting a review to decide whether to use it as a platform to build a bigger aluminium operation or sell it.

"Our review concluded that these assets do not provide Xstrata with the necessary scale or upstream exposure to represent a suitable entry point from which to build a world-class aluminium business," Chief Executive Mick Davis said in a statement.

Xstrata, which mines copper, coking coal, thermal coal, ferrochrome, nickel, vanadium and zinc, said it expected the deal to complete in the second quarter of this year.

From a small Swiss-domiciled producer of steel alloys known as Sudelektra Holding in the late 1990s, Xstrata has grown rapidly through a string of deals to challenge the world's big three miners -- BHP Billiton, Rio Tinto and Anglo American.

As well as Falconbridge, Xstrata bought one third of Colombia's Cerrejon coal operation and Peru's Tintaya copper mine last year. Last month it agreed to buy Canadian nickel miner LionOre for $4 billion and on Tuesday it agreed to buy Australia's Gloucester Coal for $320 million.