This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

BHP Billiton CEO Eyes Assets Spins

NEW YORK (The Deal) -- BHP Billiton (BHP) will spin off aluminum, manganese, coal, nickel and silver operations from Australia to South Africa to create a new mining company that could be worth as much as $17 billion.

BHP's CEO Andrew Mackenzie confirmed the plan, which was hinted at on Friday, ahead of his company's annual results conference on Tuesday, August 19.

"A demerger will maximize value for our shareholders," he said.

The new company will have 11 main assets including BHP's Colombian Cerro Matoso Nickel business, Energy Coal South Africa, Aluminum South Africa and Australian operations including manganese producer Gemco, aluminum unit Worsley, Illawarra Metallurgical Coal and the Cannington silver, lead and zinc mines.

The Deal's Paul Whitfield on why BHP is splitting up the company and what it means for shareholders:

WATCH: More market update videos on TheStreet TV | More videos from Ruben Ramirez

BHP, like many of its rivals, has spent years seeking to offload underperforming and sub-scale businesses, many of which were acquired prior to 2007 on expectation of long-term increases in global commodity prices. Those hopes foundered on slower-than-expected growth in China, and the global economic slump triggered by the 2007/08 financial crisis. Mining companies including BHP and its closest rival Rio Tinto (RIO)  were forced to swallow huge write-downs and changed tactics, and CEOs, to focus on improving shareholder returns and eschewed acquisitions.

Mackenzie, who replaced Marius Kloppers in early 2013, has turned its attention to a so-called "four pillar" strategy that is centered on BHP's largest and most profitable operations in petroleum, potash, copper, iron ore and coal. The four business units - petroleum and potash are combined in the BHP model - together account for about 97% of BHP's underlying Ebitda, according to a company presentation.

BHP on Tuesday posted Ebitda of $32.4 billion for its financial year ending June 30, up 6.8% year-on-year. Underlying profit rose to $13.4 billion, up 23% on last year's figure of $11.2 billion.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BHP $31.07 0.49%
RIO $33.38 1.50%
AAPL $95.03 -2.90%
FB $116.73 7.20%
GOOG $691.02 -2.10%


Chart of I:DJI
DOW 17,830.76 -210.79 -1.17%
S&P 500 2,075.81 -19.34 -0.92%
NASDAQ 4,805.2910 -57.85 -1.19%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs