Illawarra Coal mines a key asset in proposed BHP Billiton demerger

BHP Billiton is proposing major changes to its structure that signals a change in ownership of some of its NSW mines and the establishment of a new multi-billion dollar mid-tier resources company. 

 

The company’s Illawarra Coal business, headquartered south of Sydney in Wollongong, will be moved into a new company, dubbed ‘NewCo’, along with a range of other assets under the proposal to be voted on by shareholders.

 

The name BHP Billiton has been synonymous with Wollongong since 1935 when the company took over the Port Kembla steelworks from Australian Iron and Steel.

 

In a company announcement BHP Billiton said that ‘NewCo’ would be an “independent global metals and mining company based on a selection of its high-quality aluminium, coal, manganese, nickel, and silver assets”.

 

BHP Billiton’s thermal coal assets in NSW, Mount Arthur Coal near Muswellbrook and the Caroona Coal project in the Gunnedah Basin, are to be retained by BHP Billiton operations as the company looks to simplify its business. 

 

The proposed New Company would take a leading position in Australia’s mid-tier resources sector with 11 assets in five countries and approximately 24,000 employees and contractors world-wide.

 

It will be based in Perth and be listed on the Australian Stock Exchange with a secondary listing in Johannesburg. It will require regulatory and shareholder approval and is expected to be completed by mid 2015.

 

In Australia, the spin-off will include its three Illawarra Coal mines – Dendrobium, Appin and West Cliff – and the Cannington lead-silver mine in Queensland, plus manganese assets in Tasmania and the Northern Territory and Worsley aluminium in WA. 

 

Chief Executive Officer Andrew Mackenzie said the split would help BHP Billiton to become a ‘simpler, more productive company’.

 

‘We plan to create an independent global metals and mining company based on a selection of high-quality aluminium, coal, manganese, nickel and silver assets,’ he said.

 

Illawarra Coal will benefit from a dedicated board, experienced management team, corporate structure and tailored strategy specifically designed to improve their performance. 

 

The company says that minimal changes are expected for operational employees as a result of the demerger. Employees who join the new company will have similar employment conditions that honour existing contractual obligations and all collective agreements will remain in place.