BHP Billiton Demerger Will Spin Off Nickel, Aluminum Assets Into New Company

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BHP Billiton recently said it would spin off nickel, aluminum and other properties into a new company, in what would be one of the biggest asset sales in mining history.

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The move would mark a sharp strategic shift for BHP, from a broadly diversified company to one focused on four commodities—coal, copper, iron ore and petroleum—that accounted for nearly all its earnings last year. The Anglo-Australian company acquired many of the assets it plans to spin off in BHP’s 2001 merger with Britain’s Billiton PLC. One asset not in the plans for the new company is BHP’s Western Australian Nickel West mine, which BHP plans to sell off as a single operation.

The spinoff, meanwhile, would create a midsize metals player with a value of up to $12 billion that could become a prime takeover target.

The mining industry has been on a streamlining kick of late. Anglo-Australian rival Rio Tinto has been selling coal and copper mines after years of heavy spending on deals.

The Indian aluminum cash price saw the biggest upwards shift for the day, rising 1.5 percent to close at INR 123.60 ($2.03) per kilogram on Tuesday, August 19. The cash price of primary aluminum rose 0.8 percent on the LME to $1,994 per metric ton after a two-day drop. Following a two-day drop, the 3-month price of aluminum increased by 0.3 percent on the LME to $1,994 per metric ton.

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Chinese aluminum prices closed flat for the day. The price of Chinese aluminum scrap was unchanged at CNY 12,250 ($1,994) per metric ton. The price of Chinese aluminum billet saw essentially no change for the fifth day in a row, remaining around CNY 13,590 ($2,212) per metric ton. The price of Chinese aluminum bar saw little movement at CNY 14,200 ($2,311) per metric ton. For the fifth consecutive day, the Chinese aluminum cash price held flat at CNY 13,960 ($2,272) per metric ton.

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