BHP Billiton demerger paves the way for a new Australian mining company to evolve
The iconic Australian mining company BHP Billiton is gearing up for a history-making change in the way its entire operating divisions are structured. BHP has been rumoured for some time now to be favouring a demerger to make it even more competitive in today’s mining and resource sector marketplace.
“dominance in the energy marketplace”
Referred to a ‘radical corporate restructuring’, BHP Billiton will soon decide which of its business assets will be sold off and which ones will be re-purposed to create a new breed of energy sector specialists. Dominance in the energy marketplace has been one of BHP’s goals since the early days when it was a fledgling company operating out of Broken Hill in New South Wales.
Since then, BHP Billiton has morphed into a world class company, with billions of dollars turnover and record profits. It’s not all been plain sailing for the mining company which has dominated the Australian mining sector for decades. With a strong history of trading in tough times and more recently BHP’s decisions to invest in the new wave of mining technology is paying dividends in more ways than one.
“the new wave of mining technology”
Before BHP can shove their plans into top gear, the decision on the demerger, which would create a new listed company, could be made this week when the company’s annual results are due to be published.
What effect would a demerger make on the Australian mining projects BHP Billiton has in Australia? There is a lot of talk about how this demerger would allow BHP to concentrate on the most profitable areas of their business which are coal, copper, petroleum and iron ore; something BHP Billiton refers to as its ‘four pillars’.
“only the best performing projects”
One of the reasons BHP is doing this is they want to attract further investment in their business and having only the best performing projects would make it more attractive to investors. With mining becoming more competitive and a renewed focus on productivity and cost management, BHP Billiton are committed to achieving the best results possible for their shareholders.
BHP has also indicated when it starts the process of the demerger, some of its poorer performing assets would be up for sale. These are expected to be in the areas of nickel, aluminium and manganese mining assets as well as a few coal operations. Remembering of course that BHP has invested over 5 billion dollars in the Queensland Daunia mine in 2013 and still has plans to develop its Caval Ridge mine close by.
“BHP eyes future development in Australia”
BHP have also been toying with testing a new production plant at their South Australian Olympic Dam operation which was initially flagged as a $20 billion expansion.
The demerger is a simplistic way for BHP to fine tune its core business operations and to shore up the future of the company, which in turn gives some form of security for Australian workers who are currently employed by the mining giant. The new company could have assets worth between $14 billion and $20 billion which would make it one of Australia’s largest mining companies.
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