MINING GIANT Anglo American yesterday announced a "clear, compelling and decisive plan" which it said would transform the business - including the spin-out or sale of its iconic diamond business De Beers.

The update followed yet another approach from peer BHP, with Anglo's board rejecting the £34bn approach.

However, investors had cast doubt on Anglo's ability to turn an underperforming share price around with what had become a complex business.

Yesterday, boss Duncan Wanblad said the company would refocus its efforts on copper and iron ore, indemand raw materials.

"We expect that a radically simpler business will deliver sustainable incremental value creation through a step change in operational performance and cost reduction," Wanblad added.

De Beers will be carved off - with some speculation last night the business could be spun off via a London IPO - and Anglo will also demerge its platinum, nickel and steelmaking coal divisions.

The diamond business was founded in 1888 by Cecil Rhodes. Anglo has been involved in the governance of the firm via the Oppenheimer family - whose patriarch Ernest founded Anglo and which had majority control until Anglo finally brought it under the corporate umbrella in 2011.

Anglo's share price has slipped more than 3 per cent as investors digested the implications stemmed from it.

Top-10 Anglo American investor Ninety One, which holds a two per cent stake in the £36bn firm, said the turnaround plans could simplify the business and in fact make it a more tempting asset for a number of industry buyers.

"The plan creates a longer term way of shrinking and right-sizing the Anglo portfolio, which means it might be interesting for a lot of different mining houses in 12 months time or 18 months time," Dawid Heyl, one of the portfolio managers at Ninety One, told City A.M.

"There could be other bidders if it's a smaller, more digestible entity."

BHP has until May 22 to come back with another bid.

(c) 2024 City A.M., source Newspaper