BHP Billiton’s AGM was all very by the book, except company chairman took the opportunity to spruik its new spinoff business which was announced early this year.
Jac Nasser said the proposal to demerge some of the company’s aluminium, coal, manganese, nickel and silver assets is designed to simplify BHP.
It’s a strategy, Nasser said, the company was using to position itself for better returns in a climate of lower commodity prices and demonstrated its willingness to transform.
“In a volatile and uncertain world, our strategy continues to deliver benefits for our shareholders and communities,” he said.
“Over the past decade, demand for commodities grew significantly. Our strategy was to direct capital to projects in businesses that delivered the highest returns. This strategy has served our shareholders well. BHP Biliton has outperformed our peer group, the overall resources sector, and the broader markets.”
He said pouring capital into so many projects over the boom years has resulted in two distinct entities forming under the BHP Billiton roof.
“In one group is our large, upstream business. In the other group are assets that are not as large, despite being some of the biggest in their industries,” Nasser said.
“It is this second group of high quality assets which we propose to separate into an independent company. we see benefits for both companies and for all shareholders.”
Nasser tabled the new entity as a way for the company to reduce costs, ramp up productivity and free up capital.
“The new company will benefit from its own strategy and own systems and processes specifically tailored for a business of its scale,” he said, adding the assets should perform stronger given this type of attention.
If the proposal is approved by the board, shareholders and regulators, investors will keep their existing BHP shares and be allocated shares in the new company in equal proportion to their current stakes.
The new company would have a primary ASX listing as well as a secondary listing in South Africa.