BHP dismantles the empire

Mining giant BHP Billiton is to spin off some assets into a separate company, allowing it to focus on its most profitable businesses.

Mining giant BHP Billiton is to spin off some assets into a separate company. These include aluminium, manganese, nickel, silver and coal businesses, which in total generated around 7% of overall earnings in the year to June. The spin-off will be worth around $15bn and will float in Australia and South Africa.

What the commentators said

After a decade of"full-blooded expansionism", which included a string of failed bids worth $100bn, it is now dismantling the empire."The division is logical": it allows BHP to focus on its most profitable businesses.

The emphasis is on how to "feed the insatiable Chinese dragon ever more profitably", said Robert Lea in The Times. The businesses left are in raw materials that comprise a fifth of China's annual imports: petroleum and gas, iron ore, copper and coal.

BHP "has the bases covered" it can cover China's fossil-fuel needs, but also provide copper to connect wind farms as renewables expand.

What of the new spin-off? "We may surmise," said Jonathan Guthrie in the Financial Times, that it "owns mines BHP did not get decent offers for during a two-year disposal programme". Will its bosses be able to "invent a raison d'etre more inspiring than relieving BHP of part of its conglomerate discount?"

It's hard to see why investors would care much for it, said Swaha Pattanaik on Breakingviews. Investors in nickel or aluminium can find purer plays. Those seeking broader exposure will be more drawn to the more diversified Glencore.

Recommended

Three top-notch Asian stocks to buy
Share tips

Three top-notch Asian stocks to buy

Professional investors Adrian Lim and Pruksa Iamthongthong, managers of the Asia Dragon Trust, pick three of their favourite Asian stocks to buy now.
23 Sep 2022
Why you should short this broadband satellite company
Trading

Why you should short this broadband satellite company

With an ill-considered business plan, broadband satellite company AST SpaceMobile is doomed to failure, says Matthew Partridge. Here's how to short th…
23 Sep 2022
Share tips of the week – 23 September
Share tips

Share tips of the week – 23 September

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
23 Sep 2022
Momentum investing – and why price matters more than anything else
Investment strategy

Momentum investing – and why price matters more than anything else

The recent fashion for momentum investing, with investors piling into expensive growth stocks, is nothing new, says Merryn Somerset Webb. And the dang…
21 Sep 2022

Most Popular

Could gold be the basis for a new global currency?
Gold

Could gold be the basis for a new global currency?

Gold has always been the most reliable form of money. Now collaboration between China and Russia could lead to a new gold-backed means of exchange – g…
22 Sep 2022
Paypal, bitcoin, and the weaponisation of money
Bitcoin & crypto

Paypal, bitcoin, and the weaponisation of money

Recent events have shown how both business and governments can “weaponise” money and shut down dissent. What to do? Buy bitcoin, says Dominic Frisby.
22 Sep 2022
Why you should short this broadband satellite company
Trading

Why you should short this broadband satellite company

With an ill-considered business plan, broadband satellite company AST SpaceMobile is doomed to failure, says Matthew Partridge. Here's how to short th…
23 Sep 2022