Sandvik has signed an agreement to divest its Mining Systems operations, reported in the Sandvik income statement as discontinued operations, to the private equity company CoBe Capital. This includes its integrated in-pit crushing and conveying solutions, stockpile spreaders as well as other equipment such as stacker reclaimers in mineral port stockyards and bucketwheel miners. Sandvik says it will maintain ownership of ongoing projects which are close to finalisation, which would include its involvement in the S11D project, where the company’s four fully mobile IPCC systems will soon be commencing operations.
The closing of the transaction is expected during the fourth quarter of 2016, subject to the satisfaction of certain conditions precedent. The parties have agreed not to disclose the purchase price.The transaction entails a capital loss of 800 million SEK impacting the result of Sandvik’s discontinued operations for the third quarter of 2016. The capital loss includes a negative cash flow impact of 600 million SEK, primarily in conjunction with the closing of the deal. Mining Systems is described as “a supplier of design and engineering of material handling systems for the mining industry.” In 2015 the Mining Systems operations, with 1,100 employees, had annual sales of 5 billion SEK representing 6% of Sandvik Group revenues, and an operating loss was reported at a low single digit margin level.
“Divesting the Mining Systems is an important step in consolidating Sandvik to its core operations, which for Sandvik Mining and Rock Technology is high technology mining equipment and aftermarket offerings”, says Björn Rosengren, President and CEO of Sandvik. The intention to divest Mining Systems was first communicated through a press release on October 1, 2015.