BHP Simplifies Portfolio by Creating BHP Billiton Aluminium
BHP Billiton Aluminium (Holdings) Pty Ltd was created as a new company on May 6 through the Australian securities regulator. The “non-core” asset company was registered to BHP’s Perth office, and has two directors – John Slaven and Stefano Giorgini – and Robin Lees acting as secretary.
BHP Coal Holdings in Brisbane is the currently the sole shareholder, but BHP Billiton is the ultimate holding company. At this time, it is unclear as to whether BHP Billiton Aluminium will retain any physical assets.
The foundation of this new company comes at a time when BHP is advancing the reorganisation of its internal corporate entities. CEO Andrew Mackenzie’s “four-pillar agenda” – which aims to simplify the company’s portfolio and focus on the four pillars of the company: iron ore, copper, petroleum and coal – was the contributing factor for the re-evaluation of aluminium as a non-core asset.
The supposed plan being considered has these non-core assets being spun-off into a new $20 billion division of the BHP that would potentially be handed back to the shareholders. BHP’s board and management have made it clear that any viable options for the restructuring move are on the table. This new direction was determined after years of acquisitions have drastically changed the landscape of the company.
BHP secured tax exemptions from the Australian Tax Office as early as last year for capital gains, dividend and stamp duty issues. Goldman Sachs has been advising BHP on this transformative plan, which has been dubbed “Project River.”
“The case for the continued simplification of our portfolio is compelling and it remains our priority,” said Mackenzie. “Simplification will create a portfolio of unrivalled quality and be the catalyst for increased and accelerated productivity gains. Value is our priority, and we will get it right.”
So far, investors have been largely supportive of Mackenzie’s strategy, as it promises to unlock value and drive efficiency gains. No concrete decisions have been made regarding “Project River,” but an outcome is expected in August, when BHP’s annual results are due to shareholders.
