BHP Simplifies Portfolio by Creating BHP Billiton Aluminium
BHP Billiton Aluminium (Holdings) Pty Ltd was created as a new company on May 6 through the Australian securities regulator. The “non-core” asset company was registered to BHP’s Perth office, and has two directors – John Slaven and Stefano Giorgini – and Robin Lees acting as secretary.
BHP Coal Holdings in Brisbane is the currently the sole shareholder, but BHP Billiton is the ultimate holding company. At this time, it is unclear as to whether BHP Billiton Aluminium will retain any physical assets.
The foundation of this new company comes at a time when BHP is advancing the reorganisation of its internal corporate entities. CEO Andrew Mackenzie’s “four-pillar agenda” – which aims to simplify the company’s portfolio and focus on the four pillars of the company: iron ore, copper, petroleum and coal – was the contributing factor for the re-evaluation of aluminium as a non-core asset.
The supposed plan being considered has these non-core assets being spun-off into a new $20 billion division of the BHP that would potentially be handed back to the shareholders. BHP’s board and management have made it clear that any viable options for the restructuring move are on the table. This new direction was determined after years of acquisitions have drastically changed the landscape of the company.
BHP secured tax exemptions from the Australian Tax Office as early as last year for capital gains, dividend and stamp duty issues. Goldman Sachs has been advising BHP on this transformative plan, which has been dubbed “Project River.”
“The case for the continued simplification of our portfolio is compelling and it remains our priority,” said Mackenzie. “Simplification will create a portfolio of unrivalled quality and be the catalyst for increased and accelerated productivity gains. Value is our priority, and we will get it right.”
So far, investors have been largely supportive of Mackenzie’s strategy, as it promises to unlock value and drive efficiency gains. No concrete decisions have been made regarding “Project River,” but an outcome is expected in August, when BHP’s annual results are due to shareholders.
British Lithium Pressured Due To Calls for Electric Cars
The British demand for lithium is set to reach 75,000 tonnes by 2035 as the government works towards their ban on the sale of high-polluting diesel and petrol vehicles within the UK. This comes as automakers worldwide continue to insist on the benefits electric vehicles will have on slowing the rate of climate change.
It is estimated that the UK will require 50,000-60,000 MT of lithium carbonate a year by 2035 for battery production to satisfy government needs. This is assuming production remains at 1.2 million vehicles per year, and the amount of lithium required does not increase.
British Lithium, which hopes to begin constructing a quarry to produce 20,000 MT of lithium carbonate a year in a $400 million investment, are not without competitors, both within the UK and abroad.
Competition For Lithium Rises In Europe
After only five years after its initial launch, Cornish Lithium is setting its sights on becoming a UK powerhouse in mining lithium, aiming to begin commercial production in under four years. Jeremy Wrathall, a former investment banker and current managing director of Cornish Lithium, had the future in mind when founding the company.
“In 2016, I started to think about the electric vehicle revolution and what that would mean for metal demand, and I started to think about lithium,” he said in an interview with AFP. “A friend of mine mentioned lithium being identified in Cornwall, and I just wondered if that was a sort of unrecognised thing in the UK.”
Lithium was first discovered in Cornwall around 1864 and has not been mined again since 1914 when it was produced as an ingredient in fireworks. Now, however, Cornish Lithium is reportedly in the testing stage to see if the metal can be produced commercially to meet the growing demand required for the electric car sector.
Despite Cornwall’s close historic ties to mining lithium, Wrathall insists that the project is purely commercial.
Cornish Mining Revival For Lithium Production
“It’s not a mission that drives me to the point of being emotional or romantic,” he says. “It’s vitally important that we do get this technology otherwise Europe has got no lithium supply.”
The European Commission has also stated their goal to end the sale of new petrol and diesel cars by 2035 to aid the environment. That being said, the majority of lithium extraction currently relies on power provided by environmentally damaging fossil fuels─a slight contradiction.
Alex Keynes, from the Brussels-based lobby group Transport & Environment, is adamant that mining for lithium should be done sustainably.
“Our view is that medium-to-long term, the majority of materials including lithium should come from efficient and clean recycling.
“Europe from a strategic point of view should be looking at securing its own supply of lithium.”
Despite growing competition from abroad, British Lithium Chairman, Roderick Smith, continues to place importance on the mining of lithium within the UK.
“Imagine what the UK economy would look like if we lost our automotive industry,” Smith says. “The stakes are high for the UK.”
Smith expects the UK to compete with other European countries to secure a lithium battery plant in the near future.