19th Aug 2014 07:28
LONDON (Alliance News) - BHP Billiton PLC Tuesday confirmed that it will demerge its aluminium, coal, manganese, nickel and silver assets into a new company, pledging to cut costs and improve the productivity of its remaining businesses in an attempt to boost shareholder returns.
The move, which the mining giant had said it was considering last week, will leave it focused on iron ore, copper, coal, petroleum and potash.
The new company will be listed in Australia and South Africa and will be wholly owned by BHP Billiton's existing shareholders initially. BHP Billiton Chief Financial Officer Graham Kerr will become chief executive while Head of Investor Relations Brendan Harris will become chief financial officer. Both will be based in Perth, Australia. David Crawford will be its chairman, stepping down from the board of BHP Billiton.
The assets selected for the new company include BHP Billiton's aluminium and manganese businesses and the Cerro Matoso Nickel, Energy Coal South Africa, Illawarra Metallurgical Coal and Cannington Silver-Lead-Zinc mines.
The mining giant has been working to simplify its portfolio of assets for more than a decade as it looks at options to make the company simpler and more productive. It had been looking at options including an asset sale, but said last week that it had decided a demerger was its best option.
"For over a century, BHP Billiton has progressively reshaped its business to maintain its industry leadership. We believe the proposed demerger, if implemented, will accelerate the simplification of the Group's portfolio, provide investors with choice and unlock value in both companies. Our shareholders will have the opportunity to vote on this proposal once the necessary approvals are in place," BHP Billiton Chairman Jac Nasser said in a statement.
"In a single step, we will significantly increase BHP Billiton's focus on the exceptionally large resource basins that underpin its competitive advantage. As we move towards a simpler portfolio, comprised of our pillars of Iron Ore, Copper, Coal, Petroleum and potentially Potash, we will become a higher-margin, higher-return business," Chief Executive Andrew Mackenzie added.
BHP Billiton shares were trading 2.54% lower at 2.014.50 pence per share shortly after the market open Tuesday.
By Alice Attwood; [email protected]; @AliceAtAlliance
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