BHP Billiton in progress of ambitious plan to grow 50% value



Chief Executive Officer Andrew Mackenzie plans to meet with representatives of Elliott Management Corp. this week as the hedge fund continues to push for the sale of the company's USA petroleum business, according to two people familiar with the situation.

Elliott's revised proposal follows weeks of canvassing BHP shareholders for their views.

Citigroup analysts say activism among shareholders could ultimately result in the breakup of BHP or a significant change in its structure, according to a May 14 report.

Mackenzie added that the petroleum exploration programme has an unrisked value of more than US$20bn and cited recent successes in the Gulf of Mexico, Trinidad and Tobago, that give BHP "the confidence to accelerate our counter-cyclical investment".

On Monday, BHP launched a rebranding that drops Billiton from its logo and removes the three stylized blobs that have featured for years, in an advertising campaign that highlights its Australian heritage.

Activist investor Elliott today cranked up the pressure on miner BHP Billiton, calling for an independent review of its petroleum business.

The fund manager today also took aim at BHP's use of a Singapore marketing subsidiary to try to reduce tax liabilities in Australia, commonly known as a Singapore tax sling.

BHP chief executive Andrew Mackenzie will pitch his defence against activist investor Elliott directly to Australian shareholders next week, as the company seeks to maximise the value of its USA shale assets before any potential sale or demerger.

Speaking at the Bank of America Merrill Lynch Global Metals, Mining & Steel Conference in Spain, chief executive Andrew Mackenzie said BHP had made consistent progress in the a year ago on its plans to improve shareholder value.

Mackenzie gave a speech to the conference on Tuesday where he reiterated his confidence in boosting the value of the company by up to 50% and nearly double the return on capital, through cutting costs and carefully managing assets.

Major growth projects valued at up to $25 billion offer potential average returns of over 16% at consensus prices.

All options to realise the value of BHP's shale acreage, including further appraisal, new technology, asset sales and swaps will also be pursued, he said.

"As we now see it, we're looking at a phased expansion into Jansen with an initial stage of four million tonnes per annum, and that will generate competitive returns", Mackenzie told the conference. "I don't think there's that much to be gained from an independent review of the oil business".

BHP has said the costs of scrapping its dual-listed structure significantly outweigh the benefits. It just looks and feels like it will be very hard to swing management of a dually-listed mining giant with close to a $100 billion equity valuation and with highly diversified operations all over the world.

PNC Financial Services Group Inc. increased its position in shares of BHP Billiton plc by 538.6% in the third quarter. Its share price was above $60 per share as recently as 2014.

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