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BHP Billiton Ditches Nickel West Sale

BHP Billiton will have an additional pillar for the time being. The mining giant had been attempting to offload its Nickel West mining operation in West...

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|Nov 16|magazine5 min read

BHP Billiton will have an additional pillar for the time being.

The mining giant had been attempting to offload its Nickel West mining operation in Western Australia but has not been able to find a buyer at the right price. This year BHP announced its goal to focus solely on its four pillars—coal, copper, iron ore and petroleum—to maximise its profits. These four commodities accounted for nearly all of its profits in the last financial year. However, by not being able to sell Nickel West, disposing of its other noncore assets like aluminium and manganese will become more difficult.

“This review is now complete and the preferred option, the sale of the business, has not been achieved on an acceptable basis,” BHP said in an emailed statement. “At this time, Nickel West will remain in the BHP Billiton portfolio as a noncore asset and the company will continue to operate the business to realize its full value.”

“In terms of BHP cleaning up its structure, it’s a net negative they haven’t been able to execute a sale given a backdrop of a fairly buoyant nickel price,” said Tim Schroeders, a fund manager at Pengana Capital. “It raises some concerns over how far apart the buyer and seller were. The market isn’t going to become any easier as time ticks by.”

Experts do not believe that BHP will be able to add the nickel business back into the mix at this stage of the demerger. Nickel used to be one of the mining company’s worst-performing commodities, but a recent ban on mineral-ore exports from Indonesia drove prices up by nearly 40 percent the first half of this year.

BHP Billiton continues to unload billions of dollars of mining assets, a trend the company has stuck to over the past couple of years. A $US430 million sale of its Yeelirrie uranium deposit in the same region to CamecoCorp and a $US553 million sale of its diamond business to Dominion Diamond Corp. were the highlights of this move.

Information sourced from The Wall Street Journal.