(Bloomberg) — South32 Ltd., the mining company spun off from BHP Billiton Ltd., was valued at about A$11.3 billion ($9.1 billion) on its trading debut in Australia, missing analyst estimates.
The valuation confirmed the Perth-based company as mining’s biggest spinoff in almost a decade. It began trading at A$2.13 a share Monday. It traded at A$2.20 at 12:02 p.m. in Sydney.
South32’s market value missed a $11.2 billion median estimate among seven analyst forecasts compiled by Bloomberg. It’s the world’s biggest manganese ore producer and operator of the largest silver mine.
BHP fell 6.5 percent to A$30.39 at 12:04 p.m. in Sydney. The world’s biggest miner put 12 assets into South32 as it seeks to focus on its most profitable iron ore, coal, copper and petroleum operations.
The largest miners are reviewing their portfolios as commodity prices have tumbled and amid an industry-wide attempt to reduce costs that spiraled during a chase for volumes.
BHP and Rio Tinto Group, the second-largest miner, have completed assets sales worth $8.7 billion since 2012, while Vale SA said this month it will study an initial public offering of its base metals business.
X2 Resources, led by former Xstrata Plc Chief Executive Officer Mick Davis, is weighing an eventual bid for South32 and offered BHP about $10 billion for most of the assets last year, people familiar with the fund’s plans said last month.
Though South32 has “some world class assets, most of its mines are mature with short lives,” Jefferies Group LLC analysts led by Christoper LaFemina said in a May 15 note to clients. “Some key assets have significantly declining grades and are likely to have falling volumes and rising unit costs as a result.”
Investors received one South32 share for each one they hold in Melbourne-based BHP. The producer will have a secondary listing on the Johannesburg Stock Exchange and a standard listing on the London Stock Exchange.
