15th Aug 2014 06:39
LONDON (Alliance News) - Following the study of various structural alternatives, BHP Billiton Ltd said Friday that its preferred option for simplifying its portfolio is a demerger of a selection of its assets.
The mining giant has been working to simplify its portfolio for more than a decade as it looks at options to make the company simpler and more productive.
In April BHP Billiton said that it was turning its focus to the next phase of its overall portfolio simplification and that it had begun to examine structural options. "We believe that a portfolio focused on our major iron ore, copper, coal and petroleum assets would retain the benefits of diversification, generate stronger growth in cash flow and a superior return on investment," said the FTSE 100-listed miner Friday.
The company outlined plans that would see an increase in focus on these four "pillars," and cited potash as a potential fifth, which BHP said will mean that it is able to improve the productivity and performance of its largest businesses more quickly.
Since April the company has continued to study various structural alternatives and following a meeting this week it said that a demerger of a selection of assets has been deemed its preferred option which would see the company spin off unwanted assets, potentially including its manganese assets.
Last month the Wall Street Journal reported that BHP and Anglo American PLC were in talks to sell their jointly-owned portfolio of manganese assets in South Africa and Australia. Citing people familiar with the matter, The newspaper said the assets under discussion include two mines in South Africa, one in Australia, and processing plants in both countries. BHP owns 60% and Anglo 40% of the operations.
Also last month BHP reported a 19% year-on-year increase in iron ore production for the fourth quarter, and a 15% growth from the previous third quarter. Production of metallurgical coal grew 9%. Total iron ore production for the full-year 2014 also increased 20%, delivering its fourteenth consecutive annual production record. BHP noted that this was a strong year of production as two of its major assets, Western Australia Iron Ore and Queensland Coal, exceeded production guidance.
By Alice Attwood; [email protected]; @AliceAtAlliance
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