BHP offloads mine for $632m

BHP Billiton's divestment campaign continues to gather pace, with the company announcing the sale of a copper mine and rail asset in the US state of Arizona.

BHP Billiton's divestment campaign continues to gather pace, with the company announcing the sale of a copper mine and rail asset in the US state of Arizona.

Sale of the Pinto Valley mine and associated rail asset has yielded $US650 million ($632 million) for BHP, which is trying to free up cash by offloading as many non-core assets as possible.

Pinto Valley's new owner - once the deal is completed later this year - will be Capstone Mining, a Canadian miner with interests in North and South America.

BHP's new copper president, Peter Beaven said the sale was part of a year-long divestment campaign that had already raised $US5 billion. This includes BHP's diamond assets in Canada, a stake in a mineral sands project in South Africa and a uranium deposit in Western Australia.

More assets are expected to be sold in the months ahead, with BHP's nickel, manganese and aluminium holdings considered likely candidates, as well as some of its peripheral oil and gas assets, such as the Zamzama operation in Pakistan.

Rio Tinto is also on a divestment campaign and is trying to sell diamond and coal assets.

Bank of America Merrill Lynch analyst Peter O'Connor believes such divestments are the best hope for BHP shareholders of getting a special dividend this year.

Expectations have risen over the past week after Woodside Petroleum said its shareholders would get a special dividend. But BHP is caught between falling revenues and big capital spending plans on its US petroleum division, leading the Credit Suisse analyst team to suggest it was unlikely to be able to match Woodside's special dividend.

About $US31 billion (or 41 per cent) of BHP's capital spending over the next five years will be spent on its petroleum business, and Credit Suisse estimated $US23 billion of that would be spent on the US shale assets bought in 2011.

InvestSMART FORUM: Come and meet the team

We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles