BHPB announces a new global metal and mining company in spin off

BHP Billiton announced plans to create an independent global metals and mining company based on a selection of its high quality aluminium, coal, manganese, nickel and silver assets.

It said “Separating these businesses via a demerger has the potential to unlock shareholder value by significantly simplifying the BHP Billiton Group and creating two portfolios of complementary assets.”

Once simplified, BHP Billiton will be almost exclusively focused on its exceptionally large, long-life iron ore, copper, coal, petroleum and potash basins. With fewer assets and a greater upstream focus, the Group will be able to reduce costs and improve the productivity of its largest businesses more quickly.

BHP Billiton Limited and Plc shareholders would be entitled to 100 per cent of the shares in NewCo through a pro-rata in-specie distribution. It is intended that NewCo would be listed on the Australian Securities Exchange and would have an inward secondary listing on the Johannesburg Stock Exchange.

BHP Billiton Chairman Mr Jac Nasser, said: “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.

He added: “The new company would be established with strong leadership. Its Chairman would be David Crawford who will retire from the BHP Billiton Board in November 2014. David is one of Australia’s most respected company directors and chairmen. He has a deep understanding of the resources industry and nearly 20 years on the Board of BHP Billiton. The Board believes David’s experience and skills make him the right person to guide the new company through its entry into the global resources sector.

He added “In addition, we are pleased to announce that Graham Kerr, our Chief Financial Officer, would assume the role of Chief Executive Officer and Brendan Harris, Head of Investor Relations, would be Chief Financial Officer, both based in Perth, Australia.”

BHP Billiton’s minerals portfolio will ultimately be focused on six major operated assets: Western Australia Iron Ore, Queensland Coal2, New South Wales Energy Coal and Olympic Dam copper in Australia; and the Escondida and Pampa Norte copper mines in Chile. It is currently investing in a seventh asset in the Saskatchewan potash basin, Canada. The Group also retains its non-operated interests in the world class Antamina copper (Peru), Cerrejón energy coal (Colombia) and Samarco iron ore (Brazil) joint ventures.

Petroleum will concentrate on its high-quality assets in the United States and Australia which include: operated facilities such as Pyrenees and Macedon in Western Australia, Shenzi in the deep water Gulf of Mexico and Angostura offshore Trinidad, as well as shale resources in the United States. BHP Billiton also retains its non-operated interests in Atlantis and Mad Dog in the Gulf of Mexico, and Bass Strait and the North West Shelf offshore Australia, while pursuing other high-value exploration and development opportunities.

The assets selected for NewCo include some of the most attractive operations in their industries. Cannington (Australia) is the world’s largest producer of silver. The Manganese business is the world’s largest producer of manganese ore with mines at GEMCO (Australia) and Hotazel (South Africa) and a top global producer of alloy through its TEMCO (Australia) and Metalloys (South Africa) assets. The Aluminium business includes one of the largest and lowest cost global alumina refineries in Worsley (Australia), competitive smelters in Hillside (South Africa) and Mozal (Mozambique) and a non-operated interest in bauxite, alumina and aluminium assets in Brazil. Illawarra Coal (Australia) is a significant exporter of metallurgical coal into the Pacific Basin and Energy Coal South Africa is the third largest South African exporter of thermal coal. Cerro Matoso (Colombia) is a high-quality ferro-nickel operation.