Miner BHP lifted by plan to spin off $20bn arm

Suzie Neuwirth
MINING giant BHP Billiton’s share price climbed over two per cent yesterday, after it confirmed that it is considering spinning off a portfolio of non-core assets.

“We believe that a portfolio focused on our major iron ore, copper, coal and petroleum assets would retain the benefits of diversification, generate stronger growth in free cash flow and a superior return on investment,” said the Anglo-Australian company.

“By increasing our focus on these four pillars, with potash as a potential fifth, we will be able to more quickly improve the productivity and performance of our largest businesses.”

The FTSE 100 firm’s statement followed a report in the Australian Financial Review, which said that BHP was considering spinning off non-core assets including aluminium and nickel into a new $20bn (£12bn) company.

The report said that Goldman Sachs has been advising BHP on the project and that BHP is actively considering potential listings on the Australian, London and South African stock exchanges for the new company.

“We continue to actively study the next phase of simplification, including structural options, but will only pursue options that maximise value for BHP Billiton shareholders,” said the firm.

Like its peers, BHP has already been divesting assets over the past two years, feeling the pinch from lower prices in the aftermath of the commodities boom. Chief exec Andrew Mackenzie has said that BHP is looking to cut its spending by 25 per cent to around $15bn this year.