BHP puts its battlers in one basket
BHP BILLITON has shifted most of its struggling assets into a single division in a move the company says is a sign of its long-term faith in commodities such as aluminium and nickel.
The move will blend two existing divisions into an "Aluminium and Nickel" unit, and will affect Australian assets such as Nickel West and the Worsley alumina refinery.
The move comes after months of speculation that BHP could be preparing to divest one or more assets in those struggling sectors, which are being hurt by low prices, currency challenges and competition from China.
That speculation was fuelled by frank comments earlier this year by BHP chief executive Marius Kloppers, who declared that the aluminium sector was undergoing a ''structural, not cyclical'' shift.
Mr Kloppers also said assets would have to perform well to keep their place on BHP's balance sheet.
But despite expectations that divestments were imminent, BHP group executive Alberto Calderon said the new division demonstrated the diversified miner's desire to retain long-term exposure to those sectors.
"Despite the current challenges, BHP Billiton is committed to aluminium and nickel as commodities that may benefit from later phases of economic development in the emerging economies,'' he said.
"The combination of these into a single business unit will provide appropriate scale within the BHP Billiton portfolio, as well as simplifying the functional structure of the business to assist in our efforts to make it a more efficient and competitive organisation."
The comments will be welcomed by workers at Nickel West in Western Australia, who have been subject to a ''restructure'' since February. It has affected 155 jobs.
The change does not appear to hold any answers for workers at the TEMCO manganese operation in Tasmania, which is undergoing a review.
The new division will include six
other assets, Cerro Matoso in Colombia, Mozal in Mozambique, Hillside and Bayside in South Africa and two non-operated joint ventures, Alumar and Mineracao Rio do Norte in Brazil.
The division will be based in Perth and led by Glenn Kellow.
One long-time observer of BHP said the company's vow that it was ''committed'' to aluminium and nickel was significant, and would send a message to unions, workers and the market.
''Does it mean they won't sell a single asset in either nickel or aluminium?'' he asked. ''No, but generally speaking it means most of those assets are not on the block.''
Ironically, poor market conditions might have saved some of the assets from divestment by eroding prices.
Rio Tinto is trying to divest a collection of Australasian aluminium assets under a ''Pacific Aluminium'' banner, meaning the appearance of more sellers could flood the market.