De Beers to be spun off as Anglo American looks to fend off BHP | City & Business | Finance

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Mining giant Anglo American plans to spin off its diamonds arm De Beers, as part of its defences against at $43billion (£34billion) takeover bid from rival BHP.

Aside from looking to either sell or demerge De Beers, Anglo said that it will sell its steelmaking coal business, demerge its platinum division, and explore options for its nickel arm. It said that it has already received “strong interest” in its steelmaking coal unit.

The slimmed down Anglo will have three main divisions, copper, premium iron ore and crop nutrients. It said that the reshaped Anglo will be future proof, as both its copper and iron ore businesses will be necessary for the decarbonisation of industry and energy, as well as food security.

It said that it the three businesses have outstanding organic growth prospects and enjoy higher margins. Additionally, it said that post disposals, its cost base will be £1.4billion lower.

“We expect that a radically simpler business will deliver sustainable incremental value creation through a step change in operational performance and cost reduction, “ said Anglo American chief executive Duncan Wanblad.

“These actions represent the most radical changes to Anglo American in decades. 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 is the 14th largest mining group in the world has so far rejected two bids from BHP, the world’s biggest mining group, the first of which was worth £31billion. Both of BHP’s all-share offers for Anglo are conditional on it demerging its platinum and part of its iron ore businesses. Anglo rejected both approaches arguing that they undervalued it and were too risky and complex.

SP Angel mining analyst John Meyer said: “Anglo American’s growth strategy paints a picture of a rosy future but, with BHP and, potentially other predators, in the offing it could be too late to preserve its long independence unless it can convince its shareholders that an independent Anglo American offers them more than the shorter term sell-out.”

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