BHP Billiton Scraps Plan To Sell Western Australian Nickel West Business

(RTTNews) - Mining giant BHP Billiton Ltd. (BHP, BHP.AX, BBL, BLT.L) announced Tuesday that it has scrapped plans to sell its Western Australian Nickel West business following a review of the business. The company said it will only pursue options that maximize value for shareholders.

"The focus of Nickel West will remain on delivering safe and efficient production whilst pursuing every opportunity to maximise productivity, to reduce operating costs and increase free cash flow," BHP's Nickel West Asset President Paul Harvey said in a statement.

The company had announced the review of the business in mid-May. The review considered all options for the long-term future of Nickel West, including the potential sale of all or parts of the business.

The business includes the Mt. Keith, Cliffs and Leinster mines and associated concentrators, the Kalgoorlie smelter, the Kambalda concentrator and the Kwinana refinery.

However, it has now concluded that the preferred option of the sale of the business has not been achieved on an acceptable basis. The company was reportedly looking at a price of between $600 million and $800 million for the business, but could not find a buyer willing to pay the price for the asset.

The company noted that the Nickel West mining business will continue to operate to realize its full value, but will remain in its portfolio as a non-core asset.

BHP's nickel business is one of the world's largest nickel miners, the fifth largest refined nickel producer and a global supplier of nickel to the stainless steel industry. The company had previously made a decision to cease operations in the sub-level cave at Perseverance Underground mine due to safety concerns in December 2013.

The company had in mid-August also announced plans for the demerger of certain assets in to an independent global metals and mining company. It plans to separate its high-quality aluminium, coal, manganese, nickel and silver assets through a demerger, as it aims to become a simpler, more productive, higher-margin, higher-return company.

Following the demerger, BHP will be almost exclusively focused on its exceptionally large, long-life iron ore, copper, coal, petroleum and potash basins.

BHP noted that creating two portfolios of complementary assets has the potential to unlock shareholder value. The demerger will increase BHP's focus on these four pillars, with potash as a potential fifth, and will be able to more quickly improve the productivity and performance of its largest businesses.

It will also be able to reduce costs and improve the productivity of its largest businesses with fewer assets and a greater upstream focus.

BHP Billiton has been simplifying its portfolio for over a decade and now has 41 assets world-wide. The proposed demerger would be a significant step towards focusing on the 19 core Iron Ore, Copper, Coal, Petroleum and Potash assets that generated 96 percent of its underlying EBIT in the 2014 financial year.

BHP closed Tuesday's regular trading session on the NYSE at $58.97, down $0.26 or 0.44% on a volume of 2.93 million shares.