TUESDAY was a ‘name changer’ for Richards Bay’s aluminium smelter as the company celebrated its new South32 title with a flag-raising ceremony and fresh grey and yellow logos replacing the former Hillside signage.
South32, which separated from parent BHP Billiton three weeks ago, will focus on the group’s less profitable assets such as alumina, aluminium, coal, manganese, nickel, silver, lead and zinc.
The new entity aims to become leaner and more efficient as the latter products continue to struggle against weak commodity prices.
BHP Billiton Chairman Jac Nasser said South32 will simplify BHP Billiton’s portfolio, while retaining the benefits of scale and diversification.
‘We believe that the separation will create two successful companies in BHP Billiton and South32,’ said Nasser.
‘It 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 name derives from the fact that the southern hemisphere assets that comprise South32 lie approximately on the 32nd parallel.
Good start
In the few weeks since the companies split, South32 has already received positive responses from institutional investors.
Global investment banking firm Jefferies and German global broker Deutsche Bank have both recommended the company for having a strong balance sheet and reasonable cash flow.
A Deutsche Bank research analyst believes the price target points to a potential upside of 12.50% from the company’s current market value of about $10-billion.
Meanwhile, Australian financial services company Intelligent Investor has stated ‘a giant has been born’ in the face of recent negative media reports on the company’s growth potential.
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