Anglo American plans to break itself up as the embattled mining group tries to win over shareholders following its rejection of a £34bn takeover bid from rival BHP.
In a series of sweeping changes to the 107-year-old mining company, Anglo said on Tuesday that it would sell or demerge its De Beers diamond business, its South African-based Anglo American Platinum operation as well as its coking coal assets.
London-listed Anglo will instead focus on its copper, iron ore and crop nutrients businesses. BHP, the world’s biggest miner, has set its sights on securing Anglo’s copper business, which is expected to boom as the world decarbonises.
Since rebuffing two approaches from BHP, Anglo’s chief executive Duncan Wanblad has been under intense pressure to set out the group’s future as a standalone group.
Laying out the proposed changes, Wanblad said: “These actions represent the most radical changes to Anglo American in decades.” They will result in “a radically simpler business [that] will deliver sustainable incremental value creation”.
Anglo said it would also pull back on spending on Woodsmith, a flagship project in the UK designed to create a vast underground mine producing a yet-unproven fertiliser. Instead of spending $1bn a year to build the mine by 2027, only $200mn will be spent next year and nothing in 2026.
Shares in Anglo fell 0.5 per cent to £27.03 in early trading on Tuesday. BHP’s improved offer valued Anglo at £27.53, up from approximately £25 in its original bid.
Anglo shareholders have predicted that the group would struggle to sustain its current structure. They have long complained that the value of Anglo’s coveted copper mines in Latin America has been obscured by its other lacklustre operations, particularly its platinum and diamond divisions.
As part of its bids, BHP has a provision requiring Anglo to spin off its two Johannesburg-listed subsidiaries, Anglo American Platinum and iron ore miner Kumba.
Following Anglo’s announcement on Tuesday, shares in Anglo American Platinum, which produces a range of metals in South Africa, fell 7 per cent. Anglo intends to keep Kumba Iron Ore as part of a “premium” iron ore division that would also include its Minas Rio mine in Brazil.
Alongside dismantling the structure it has maintained for years, Anglo also vowed to cut a further $800mn of costs annually on top of $1bn already earmarked.
Anglo provided few details on where the cost savings would come from, saying it would “need to consider its global workforce arrangements to realise the opportunities for its employees and to ensure delivery of the accelerated strategy”.