Anglo American plans to cleave off coal, platinum, and diamonds after rejecting fresh £34bn offer from BHP

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ANGLO AMERICAN has announced plans to break up the company, including getting rid of its coking coal, platinum, and diamonds , as it fends off a takeover from mining rival BHP.

Anglo American announced the restructure today after yesterday rejecting a £34bn (US$42.6bn) bid from BHP made on 7 May. Anglo American held the same line for rejecting the first unsolicited £31bn offer last month: the proposal significantly undervalues the business and its prospects.

In response, Anglo American has unveiled plans to squeeze more value from the company by divesting its coking coal business, selling off or demerging its iconic De Beers diamonds firm, and demerging its platinum business. As for its nickel interests, it will look at options to temporarily shut down production – described in industry parlance as “care and maintenance” – and possibly selling off the business. This follows a slump in nickel prices brought about by a surge of output from Indonesian producers.

Duncan Wanblad, CEO of Anglo American, said: “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.”

In short, Anglo American is betting its future on a simpler portfolio focused on copper and iron ore.

BHP is keen to absorb its rival’s copper assets to have a larger footprint in what it calls “future facing commodities”. Copper demand is expected to rise from 28.3m t in 2020 to 40.9m t in 2040, driven by the push to replace fossil fuels by electrifying energy generation and transport.

Doubts cast over the future of the UK’s polyhalite mine

Anglo American said it will slow down the development of its fertiliser business. This means less investment for its Woodsmith polyhalite mine under development in northeast England. The company had planned to invest US$1bn a year and begin production in 2027. It will now reduce spend to just US$200m next year and nothing in 2027. Asked what impact this will have, a spokesperson said it’s likely to delay production, but the company is not yet sure until when.

Simon Clarke, MP for Middlesbrough South and East Cleveland whose region is set to house the facility where the polyhalite will be processed, said the news was an unwelcome surprise and a major blow. He said he will seek a meeting with Anglo American and share what further information he learns.

The simplification of the business is predicted to save US$800m in annual costs from the end of 2025. However, few details on where the savings will be made or whether it will lead to job losses have been provided.