OM Group to exit cobalt business

US speciality chemicals firm OM Group has signed a deal to sell its cobalt business for up to $435 million (£280 million) to a joint venture between Freeport-McMoRan Copper & Gold, Lundin Mining and Gécamines. The deal includes downstream activities, in particular cobalt refining in Kokkola, Finland.

OM Group will receive $325 million up front and a further $110 million if and when commercial targets are achieved.

After the sale, the company expects to have $500 million in cash, which it will use to clear ‘a substantial portion’ of its debt. It will also look to strengthen its position in growth markets including the automotive systems, electronic devices, aerospace, general industrial and renewable energy markets.

‘The divestiture of our cobalt business is the final step in exiting our legacy commodity businesses and is consistent with our strategy to move up the value chain into technology-based businesses with attractive growth prospects and more predictable earnings profiles,’ said Joe Scaminace, chairman and chief executive of OM Group.