BHP Billiton Limited (ASX: BHP) is looking more and more likely to divest its Nickel West assets, after the miner confirmed it was reviewing "all options" for the long-term of the business including "the potential sale of all or parts of the business".
Here are three solid reasons why BHP Billiton should sell the business:
- Nickel prices. The price of the metal has soared around 50% since the beginning of the year thanks to Indonesia's ban on the exports of raw materials. The commodity's higher price will ensure BHP Billiton gets a much more attractive offer for the assets
- Simplification. Under CEO Andrew Mackenzie, the mining giant will focus on iron ore, copper, petroleum and coal (potash will likely become the company's fifth "pillar"). BHP Billiton needs to continue selling assets it considers to be non-core to achieve this goal
- Shareholder returns. Selling Nickel West would free up a significant amount of cash which would allow BHP Billiton to return more money to shareholders. BHP has indicated this will happen when its net debt falls below US$25 billion.
A better bet than BHP Billiton
BHP might be a safer bet than its mining peers like Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: BHP), but it still isn't the best company to buy right now.
