Anglo American to restructure operations as it rejects £34bn BHP offer

  • The mining giant intends to divest or demerge numerous businesses
  • Alongside this, the firm will ‘slow down development’ in Woodsmith
  • Anglo American has just rejected a £34bn buyout offer from BHP

Anglo American plans to offload large portions of its business after turning down a £34billion takeover bid from rival BHP.

The mining giant told investors on Tuesday it intends to divest or demerge its steelmaking coal segment, the De Beers diamond business and Anglo American Platinum, the world’s largest platinum producer.

Alongside this, the FTSE 100 company will ‘slow down development’ in Woodsmith, its potash mine operation in Yorkshire, in order to deleverage its balance sheet.

Restructuring: Anglo American intends to divest or demerge its steelmaking coal segment, the De Beers diamond business and Anglo American Platinum

Instead of spending $1billion per annum on the mine, its capital expenditure will fall to $200 million in 2025 before falling to zero the year after.

Anglo American said the restructuring would enable it to focus on its premium iron ore, copper, and crop nutrients divisions.

The group predicts it would lower costs by $1.7billion (£1.35billion) a year and increase its earnings before nasties margin by 15 percentage points to 46 per cent.

Duncan Wanblad, the firm’s chief executive, said the measures ‘represent the most radical changes to Anglo American in decades’.

He added: ‘I believe these are the right decisions to position Anglo American to capitalise on the outstanding resource endowment opportunities within our portfolio today.’

Anglo American’s announcement comes a day after it rejected a £34billion buyout offer from BHP, saying it continued to ‘significantly undervalue’ the group and was ‘highly unattractive.’

Last month, the London-listed group refused a £31billion approach from its much larger Australian rival for similar reasons.

Under the deal’s terms, Anglo American would divest the holdings in its platinum and Kumba iron ore businesses to its shareholders.

Meanwhile, BHP would possess greater interests in copper, a vital element in artificial intelligence and new green technologies, such as electric vehicles, solar panels and wind turbines.

In South America, it operates the world’s biggest copper mine, Escondida, located in the Atacama Desert, while Anglo American runs three of the continent’s ten highest-producing copper mines.

Danni Hewson, head of financial analysis of AJ Bell, said: ‘The clock is ticking for BHP to put even more skin in the game or simplify its offer.

‘Without either of those moves, Anglo might well persuade shareholders that going it alone is the best bet as global demand for copper continues to soar.’

Anglo American shares were 0.6 per cent lower at £26.91 on Tuesday morning, but have still expanded by around 36 per cent since the year started.