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BHP Billiton Limited (BHP) To Sell Coal Assets To Adaro

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A look into what prompted BHP to make such a move and how it will affect the future running of the company

BHP Billiton Limited (ADR) (NYSE:BHP) announced the sale of its Indonesian coal assets to Adaro. This was prompted by a decrease in the prices of metallurgical coal.

As per Adaro, the deal was worth $120 million and will be effective after the necessary approvals from Government of Republic of Indonesia. This will be huge for both the companies as it will allow BHP to have a narrow focus, so it can concentrate on fewer of its important projects.

Moreover, BHP and Glencore International PLC, St. Helier (OTCMKTS:GLCNF) are also among the final bidders for the Anglo American Australian metallurgical coal assets. Anglo wants to raise around $3-4 billion from the sale of coal assets. This will help it reduce its burdening debt and will allow it to focus on some its core assets such as diamonds and copper.

Furthermore, an Iron ore glut is expected to continue, after high exports coming from Iron ore shipments from Australia were recorded last month. In the month of May, exports were recorded at 39.4 million metric tons compared to 37.7 million metric tons in the month of April. 

BHP’s stock traded at $28.76 as at the closing bell on Tuesday. The stock trades in the 52-week range of $28.62-29.17. The company has a market cap of $75.08 billion.

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