BHP Billiton shareholders have voted in favour of a demerger which will see the creation of multi-billion dollar mining company South 32.
More than 98 per cent of shareholders backed the historic move which will see South32 take on BHP’s unwanted assets.
This includes its Illawarra and South African coal mines as well as a number of aluminium, manganese, nickel, silver, lead and zinc operations leaving BHP to focus on what it calls its five pillars of iron ore, copper, coal, potash, and oil.
BHP chairman Jac Nasser told shareholders the demerger would create “two successful companies”.
“The demerger of South32 simplifies BHP Billiton’s portfolio while retaining the benefits of scale and diversification,” Nasser said.
“The demerger of South32 is a major step forward in the evolution of BHP Billiton and our board believes it will create long-term value for our shareholders.
“We wish the employees, management and board of South32 well as the new company prepares for business in its own right.”
South32’s head office will be in Perth, with a regional head office and global shared services centre located in Johannesburg.
The company will be listed on the Australian Securities Exchange, the London stock market and the Johannesburg stock exchange.
South32 is expected to have a market capitalisation of close to $US12 billion when it starts trading later this month.
CEO of South32 and former BHP executive Graham Kerr described the new company as "cash competitive".
“We are to inherit some high-quality assets that have been well maintained, and which have been cash-generative through the cycle, and they really come with some great people,” Kerr said.
“There is a place in the market for a company like South 32. And that has been reinforced during visits with our investors and analyst tours of our assets.”
Kerr said the company’s initial focus would be on organic growth before it eyed any acquisitions.
"Companies that start on day one saying we have to go buy something, they end up paying too much at the wrong time and put themselves into trouble. We will be ready, but it is not the primary focus," Kerr said.
"We will continue to look at ways to maximise the portfolio, that will be internally and externally, we have always said M&A is opportunistic, it is not really a strategy."