Worsley alumina refinery.
Worsley alumina refinery.

There is mounting speculation that BHP Billiton is getting close to jettisoning its unloved nickel and aluminium businesses.

A possible demerger of the two divisions from BHP's mainstays led by Pilbara iron ore would have major ramifications for thousands of WA workers employed at the Nickel West in the Goldfields and bauxite and Worsley alumina operations in the South West.

WestBusiness has already reported that Goldman Sachs has begun a sales process for Nickel West.

Reports on afr.com today suggest Goldman Sachs is also working on a broader "Project River", the code name for a strategic review of various options for BHP to maximise value from the two non-core metal divisions. Goldman Sachs has been the long-time corporate adviser to BHP, including on its unsuccessful takeover bid for Rio Tinto.

BHP responded to the Australian Securities Exchange a few hours ago saying a "simplification of our portfolio is a priority and is something we have pursued for several years".

It would not discuss specific measures or a preference for a spin-off of the nickel and aluminium divisions, although it also did not deny the suggestion of a $20 billion demerger.

"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 flow3 and a superior return on investment," BHP said in its ASX statement.

"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.

"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."

It is unclear how a demerger would be structured given BHP's dual-listings on the ASX and London Stock Exchange.

BHP shares were up 64 cents, or 1.76 per cent, to $37.11 at 12.10pm.

The West Australian

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