In a dramatic shift, Anglo American Plc announced a significant restructuring plan on Tuesday.
The move aims to both fight off a takeover bid and position the company for the future.
Facing a £34 billion ($43 billion) unsolicited offer from rival BHP Group, Anglo American is shedding its diamond, platinum, and coal assets. This includes potentially selling its iconic De Beers diamond business and its Anglo American Platinum unit in South Africa. Coking coal mines in Australia will also be divested.
These departures will leave a streamlined company laser-focused on iron ore and copper. Copper, in particular, is seen as a critical metal for the ongoing energy transition. By prioritizing copper, Anglo American positions itself to capitalize on the growing demand for renewable energy infrastructure.
The restructuring doesn’t stop there. Anglo American is also hitting the brakes on its giant fertilizer project in England. This project has been a point of contention with investors who have been urging the company to focus on more profitable ventures.
While the fertilizer project isn’t getting scrapped entirely, spending will be significantly reduced. This frees up resources to be directed towards Anglo American’s new core focus: becoming a copper giant.
The company’s decision comes amid BHP Group’s aggressive takeover attempt. Anglo American has already rejected two such offers, deeming them inadequate. This restructuring seems to be a two-pronged attack: resisting the BHP takeover while simultaneously making itself a more attractive company in the long run.
Only time will tell if Anglo American’s gamble pays off. Shedding its historic diamond business and other established holdings is a bold move. But if copper prices continue to rise and the company successfully positions itself as a leader in the copper market, this transformation could propel Anglo American towards a bright future.