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BHP Billiton share price drops as it pushes ahead with $14bn spin-off
BHP Billiton, the world’s second-largest miner, has confirmed plans to spin off some of its assets into a new metals and mining company worth $14bn (£8.38bn), effectively undoing the 2001 merger that created it.
Among the assets to be demerged are aluminium, coal, manganese, nickel and silver mines, including the Cannington silver and lead mine in Australia. It also said it wants to sell its Australian Nickel West business separately. The spin-off will create a “significantly” simplified group focusing on its “exceptionally large, long-life” iron ore, copper, coal, petroleum and potash basins.
The new business will be listed in Australia with a secondary listing in South Africa, and will be headed up by Graham Kerr, BHP Billiton’s current chief financial officer. David Crawford, who is due to retire from the miner’s board in November, will take the chairman’s position.
Shares in BHP Billiton rose last week when after months of speculation it admitted it was considering a spin-off.
But this morning, the price lost more than 4 per cent on the back of disappointing results, with revenues of $67.2bn (£40.4bn) falling short of analysts’ expectations, which were closer to $67.9bn (£40.8bn). EBITDA hit $32.3bn (£19.4bn), in line with consensus, while attributable profit rose 10 per cent to $13.5bn (£8.1bn).
BHP Billiton chief executive Andrew Mackenzie remained positive, however,
By concentrating on what we do best, the development and operation of major basins, we can improve our productivity further, faster and with greater certainty. With a simpler portfolio, we are targeting sustainable, productivity-led gains of at least $3.5bn per annum by the end of the 2017 financial year.
Despite the fall in share prices, investors are clearly excited: unused to the levels of traffic created by the announcement, this morning BHP Billiton's website crashed.