Anglo American looks to divest from De Beers

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Anglo American says it plans to implement a number of major structural changes to accelerate delivery against its strategic priorities of operational excellence, portfolio simplification, and growth key amongst them divesting from De Beers

The global mining group said it is looking to either divest or demerge from its diamond unit in order to improve strategic flexibility for both De Beers and Anglo American.

Chief Executive of Anglo American, Duncan Wanblad pointed out that decision to focus the company’s portfolio in world-class resource asset base in copper and premium iron ore – while retaining crop nutrients optionality at Woodsmith – marks a major new phase in executing our strategy.

“We expect that a radically simpler business will deliver sustainable incremental value creation through a step change in operational performance and cost reduction,” he said.

Wanblad added they were of course conscious of the impacts of making such far-reaching changes, particularly on the group’s employees.

“We see considerable opportunities for our employees, both in delivering the full potential of Anglo American and in the businesses that we will be divesting or demerging, all of which are high quality businesses in their own right,” he said.

“By implementing these portfolio changes ourselves, we will be able to do so in a manner that is respectful of our employees, host communities and countries, including ensuring that in South Africa in particular Anglo American continues to play its role as a responsible business leader to support the country’s national priorities.”

Other key decisions include demerging Anglo American Platinum in a responsible and orderly way to optimise value for both Anglo American’s and Anglo American Platinum’s shareholders.

Anglo’s announcement follows earlier statement by the group that it had rejected a second unsolicited, non-binding bid from its rival BHP Group Limited.

 “The latest proposal from BHP again fails to recognise the value inherent in Anglo American. Anglo American shareholders are well positioned to benefit from increasing demand from future enabling products while the increasing capital intensity to bring greenfield supply online makes proven assets with world class resource endowments ever more attractive,” said Stuart Chambers, Chairman of Anglo American.

“The Anglo American team is focused on delivering against its strategic priorities of operational excellence, portfolio simplification and growth and is set to accelerate delivery in order to unlock this inherent value.”

The BHP offer comprised an all-share offer for Anglo American, with a requirement for Anglo American to complete two separate demergers of its entire shareholdings in Anglo American Platinum Limited and Kumba Iron Ore Limited to Anglo American shareholders. 

However, Anglo said Anglo American Platinum Limited and Kumba Iron Ore Limited shareholdings, at current market value, are worth approximately $15 billion and 34% of the proposed total consideration.

“This is a substantial amount of stock to distribute and reflects a majority of the shares of both Anglo American Platinum Limited and Kumba Iron Ore Limited. This creates significant uncertainty as to the delivered value as part of the proposal,” Anglo said.

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