BHP announces their new $14bn metals and mining company

In a bid to increase productivity and performance, BHP Billiton is allocating some of its assets to a new $14bn (£8.4bn) company. The Chief Finance Officer of BHP, Graham Kerr, will be heading the new spinoff company that is tentatively being called the NewCo, for now. This new company will be dealing with the aluminium, coal, manganese, nickel and silver operations.

BHP itself has enjoyed a 23% rise in the annual profits, surprising analysts.

The new company will be listed in the Australian stock market soon with a secondary listing in South African market as well. These, however, will be confirmed only after a shareholder vote and an approval by the regulators.

Although BHP shares fell by nearly 4% in the London listings post the announcement, BHP officials are hopeful about the change saying it will allow them to focus more on their core processes that is, iron ore, coal, petroleum, copper and potash production.

According to analysts, this demerger was expected and is said to be in full effect by the first half of 2015. David Lennox, a resource analyst from Sydney’s Fat Prophet said, “Cash from an asset sale is no longer critical to the group”. It is more important to remove the underperforming businesses to draw higher shareholder returns and capital allocation.

BHP is a multinational company with their headquarters in Melbourne, Australia and is listed in both Australian as well as London Stock exchange with a secondary listing in South Africa. They are known as one of the leading manufacturers in aluminium, coal copper. They also deal with silver and uranium and have a fair interest in oil and gas.