MILWAUKEE—Cabot Corp. is selling its specialty fluids business to Sinomine Rare Metals Resources Co. Ltd. as part of a strategy to focus on growth in core businesses.
Cabot will part with the specialty fluids business in a transaction valued at $135 million, expected to close in this year's third quarter, according to a company spokeswoman.
The purchase price consists of $130 million to be paid at closing, subject to customary closing adjustments, and additional cash royalties of up to $5 million for lithium products, payable over a 10-year period, according to a company news release.
The specialty fluids business employs about 120, primarily located in four facilities in Aberdeen, Scotland; Bergen, Norway; Manitoba, Canada; and Singapore, the spokeswoman said.
Sinomine, a joint stock public company headquartered in Beijing, provides geological exploration and mining investment and base metal chemical manufacturing. The company was a good match for the specialty fluids segment because both teams share a common approach to ethical mining and mineral processing, employee safety and environmental responsibility, the spokeswoman said.
"Mineral mining is core to Sinomine's business, which means that the specialty fluids business will be better aligned within their industrial focus," she said. "In addition, Sinomine's strength in mining and presence in the cesium chemical business will be instrumental in enabling the specialty fluids business to grow," she said.
As a company, Sinomine has been disciplined in making strategic acquisitions to implement mineral resources supply on a global scale, specifically looking for opportunities based in mutual cooperation, benefit and respect, said Pingwei Wang, CEO and executive director for Sinomine Resource Group.
The move enables Cabot to continue its "Advancing the Core" strategy in which the company focuses on investing in its core businesses, including businesses in reinforcement materials and performance chemicals, the spokeswoman said.
"We seek to capture market growth and enhance our portfolio through new and differentiated products and a targeted mix across applications, products and customers," she said. "We have actively focused on bolt-on applications that will further build our scale or complement our geographic footprint."
In 2017, Cabot acquired Tech Blend and Co. L.P., a producer and manufacturer of black concentrates for the thermoplastics market based in Canada, for about $64 million. The acquisition extended the company's global footprint in black masterbatch and compounds, Cabot said. The next year, it revealed plans to add more than 300,000 metric tons of carbon black capacity through a plant expansion at its facility in Cilegon, Indonesia, operational improvements and debottlenecking projects.
The initiative involved about $50 million invested in the latter two missions across 18 of its carbon black facilities. The overall capacity expansion should bring Cabot's total to about 2.5 million tons by 2021.
Also in 2018, Cabot acquired NSCC Carbon Co. Ltd., a carbon black manufacturing facility in Pizhou, China, from Nippon Steel Carbon Co. Ltd. for about $50 million over two years. The acquisition added about 50,000 tons to Cabot's total capacity.
Cabot also is investing in capacity expansions in its carbon black and fumed silica businesses, the spokeswoman said.
The company recently made an explicit choice to invest in energy materials, with sales growing sharply during the past few years, she said.
"Our application 'know-how' and suite of technologies for batteries drove revenue growth of over 70 percent in our energy materials product line in 2018 and will enable significant growth in this application over the next five to 10 years," she said. "We've also been leveraging our unique strategic linkage between upstream carbons and downstream compounds to drive dramatic growth in our specialty compounds business."
Cabot was advised by Grace Matthews and Jones Day in the Sinomine sale.