The Motley Fool

BHP Billiton Limited to sell nickel assets: Is today the time to buy?

Mining giant BHP Billiton Limited (ASX: BHP) has hired Goldman Sachs to sell its Nickel West division – a move which highlights the company’s seriousness about offloading its underperforming assets.

Although the mine booked a $151 million loss in the first half of this year (the miner has booked impairment charges of almost US$1.6 billion on the assets in the last two years), it has still received significant attention from parties such as Glencore Xstrata and X2 Resources which are both looking for ways to reduce costs and improve productivity. Canada’s First Quantum Resources, which bought BHP’s Ravensthorpe nickel mine in 2009, is also in contention to acquire the assets while Australian-based Western Areas Ltd (ASX: WSA) has also been cited as expressing interest (although they are unlikely to have the capacity to support such a big acquisition).

While X2 has reportedly considered an offer worth less than $1 billion, Glencore appears to be the more appropriate party given that its Minara unit controls the nearby Murrin Murrin mining and refining project. Despite the fact that it very recently booked an impairment charge of US$454 million on the Murrin Murrin project, Glencore’s CEO and largest shareholder Ivan Glasenburg said: “We will kick the tyres… (acquiring Nickel West is) something that would make sense but it is an asset that’s had problems.”

The price of nickel has remained depressed in recent years but has been slowly improving thanks to the Indonesian ban on the exports of unprocessed ore and is now sitting at around US$7 per pound. Although a number of analysts predict that the ban could be short-lived, the elevated price of the commodity will help boost BHP’s sale prospects.

Foolish takeaway

A sale of the assets would be good news for BHP shareholders in that it will allow it to increase its focus on more profitable divisions (such as iron ore, copper, coal or petroleum) while also freeing up a significant amount of capital which would allow for greater shareholder returns. BHP’s shares have fallen nearly 3% today, which could be a good opportunity to pick up a position in the miner.

Attention investors: Brand-new report reveals #1 ASX pick… FREE!

If you’d bought this company’s shares in November 2012, you’d already have made 700%! But the massive profits could just be beginning, says one top investor. In our brand-new FREE research report, "Joe Magyer’s #1 ASX Tech Stock for 2014," you’ll discover the name, code and a full analysis. Simply click here, it’s FREE!

Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.

NEW. Five Cheap and Good Stocks to Buy in 2019…

Our Motley Fool experts have just released a brand new FREE report, detailing 5 dirt cheap shares that you can buy today.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading near a 52-week low all while offering a 2.8% fully franked yield…

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.