As it looks to simplify its portfolio of assets and turns its focus to its core business, BHP Billiton signaled that it might spin-off of unwanted businesses such as aluminum and nickel into a separate company.
"We continue to actively study the next phase of simplification, including structural options, but will only pursue options that maximize value for BHP Billiton shareholders. Any course of action remains subject to detailed review and an assessment of alternatives," the company said in a statement on April 1.
"We believe that a portfolio focused on our major iron ore, copper, coal and energy assets would retain the benefits of diversification, generate stronger growth in free cash flow and a superior return on investment. 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 statement came shortly after The Australian Financial Review newspaper reported that BHP was considering spinning off non-core assets into a separate company, offering shares to existing shareholders, Reuters reported.
In the past, chief executive Andrew Mackenzie has said that the company plans to focus on its large iron ore, copper, coal and petroleum businesses, its four pillars, while selling off smaller, less profitable operations.
The Australian Financial Review said BHP's "project river" review, with advice from Goldman Sachs, has been running for more than a year. Work has "gathered momentum", according to the report, with senior executives "leaning toward spinning off the company with potential listings on the Australian, London and South African stock exchanges."
It said findings of the study could be put to the BHP board at its meetings in April or May.
BHP said it is still running a detailed review of a range of alternatives. It gave no timeframe for a decision.
"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," BHP said in its statement.
BHP has already sold some petroleum, copper, coal, mineral sands and uranium assets and its diamonds business over the past few years, including $6.5 billion worth of sales announced or completed last year.
It has not spun off an asset to shareholders since 2002, when it spun out its flat steel products business as BlueScope Steel. That followed the spin-off of its OneSteel business, now Arrium, in 2000.