It is interesting to read how the big company completes the demerger. BHP Billiton intends to simplify its portfolio by demerging a group of high quality assets to create an independent global metals and mining company, South32.
According to The Australian Financial Review today, BHP chief executive Andrew Mackenzie's bold plan to drive costs out of the slimmed-down BHP Billiton by modelling it on an advanced manufacturer will allow the miner to boost its earnings by $US260 million for every 1 per cent reduction in costs.
Mr Mackenzie said that he is confident the spin-off will mean BHP can achieve bigger cost savings than the $4 billion the company has targeted by 2017.
BHP will be left with the "core of the core" of just 12 assets, down from 30, after freeing itself of the South32 portfolio.
While BHP is becoming less diversified at a time of high volatility and price routs for its biggest earners, oil and iron ore, Mr Mackenzie insists it is the "absolutely the right time" to spin off South32, in part to shore up both companies' defences against price volatility.
A simplified BHP will be able to make much more "comprehensive use of BHP's advanced manufacturing approach, which is particularly suited to large, long-life assets".
Splitting off South32 will see both companies taken "to next level of performance, quicker than possible if they were together, and quicker than our competitors".
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