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

Marks & Spencer shares look cheap – should you buy in?
Retail stocks

Marks & Spencer shares look cheap – should you buy in?

Marks & Spencer shares have been a disappointment for investors for two decades. But with the company now on something of a comeback, Rupert Hargreave…
25 May 2022
The Federal Reserve wants markets to fall – here’s what that means for investors
Stockmarkets

The Federal Reserve wants markets to fall – here’s what that means for investors

The Federal Reserve’s primary mandate is to keep inflation down, and lower asset prices help with that. So, asks Dominic Frisby – just how low will st…
25 May 2022
Four high-quality US stocks to give shelter from the storm
Share tips

Four high-quality US stocks to give shelter from the storm

Professional investor Timothy Parton of the JPMorgan American Investment Trust picks four solid US stocks to buy now.
24 May 2022
Three undervalued mid-cap stocks with attractive prospects
Share tips

Three undervalued mid-cap stocks with attractive prospects

Professional investor Katen Patel of the JPMorgan Mid Cap Investment Trust picks three fast-growing mid-cap stocks to buy now.
24 May 2022

Most Popular

The world’s hottest housing markets are faltering – is the UK next?
House prices

The world’s hottest housing markets are faltering – is the UK next?

As interest rates rise, house prices in the world’s most overpriced markets are starting to fall. The UK’s turn will come, says John Stepek. But will …
23 May 2022
The Federal Reserve wants markets to fall – here’s what that means for investors
Stockmarkets

The Federal Reserve wants markets to fall – here’s what that means for investors

The Federal Reserve’s primary mandate is to keep inflation down, and lower asset prices help with that. So, asks Dominic Frisby – just how low will st…
25 May 2022
Should you be worried about energy windfall tax proposals?
Energy

Should you be worried about energy windfall tax proposals?

Calls have been growing for a windfall tax on UK oil and gas producers. It's a popular idea, but is it a good one? And what does it mean for investors…
24 May 2022