Anglo American Outlines Major Restructuring Plan

Anglo American PLC (LON: AAL) has announced a comprehensive restructuring plan that will see the London-listed mining giant retaining its prime copper and iron ore assets while spinning off its platinum and diamond businesses. The share price has dipped 2.20% through this mornings trade, as markets digest the change in tact.

This decision comes after the company rejected a second takeover bid from BHP Group. The offer, which proposed 0.813 of a BHP share for each Anglo American share, valued the latter at approximately £34 billion.

In a bold move that the company describes as the “most radical” change to its portfolio in over a decade, Anglo American plans to demerge Anglo American Platinum Ltd and either divest or demerge De Beers, its diamond unit. Speaking on the strategic shift, CEO Duncan Wanblad emphasized the company's intention to simplify its business structure. The focus, according to Wanblad, will be on fostering increased value creation through concentration on core assets and improving operational performance while intensifying cost reduction efforts.

Clear pathway for portfolio value delivery – in the right way and for value
Steelmaking Coal – To be divested and currently responding to strong buyer interest
Nickel – Exploring options for care and maintenance and divestment
Anglo American Platinum – To be demerged in a responsible and orderly way to optimise value for both Anglo American’s and Anglo American Platinum’s shareholders
De Beers – To be divested or demerged, to improve strategic flexibility for both De Beers and Anglo American

Anglo American Release

The cost-saving objectives are aggressive, with Anglo American set to achieve $1 billion in annual savings in operating expenditure by 2024. An additional $800 million reduction in costs is targeted by the end of 2025.

Anglo American’s strategic pivot represents not only a rejection of BHP Group's acquisition attempt but also a clear sign that the company is firmly steering its future towards a streamlined operation with a focus on its highest potential assets. Industry observers will be watching closely as the company progresses towards its cost-saving goals, and as the implications of the demerging process unfold for its platinum and diamond businesses.