BHP said many of the assets within “NewCo” were the most competitive in their industries, including the Cerro Matoso nickel mine in Colombia, Energy Coal South Africa, Illawarra Coal, the Cannington silver-lead-zinc mine and the aluminium and nickel businesses.

However, the spin-off excludes the Nickel West assets, which BHP said it would continue to review.

Perth-based NewCo will have assets in five countries and be led by current BHP chief financial officer Graham Kerr.

BHP Copper president Peter Beaven will replace him, while current BHP head of group investor relations Brendan Harris will be CFO of NewCo.

Long-time BHP director David Crawford will chair NewCo.

BHP shareholders will receive 100% of the shares in NewCo, which will have a primary listing in Australia and secondary listing in Johannesburg.

BHP chairman Jac Nasser said the demerger represented the continuing reshaping of the business.

"We believe the proposed demerger, if implemented, will accelerate the simplification of the group's portfolio, provide investors with choice and unlock value in both companies,” he said.

BHP CEO Andrew Mackenzie said by focusing on the four pillars of iron ore, petroleum, copper and coal, with potash as a potential fifth, the company would be higher-margin, higher-return.

"As a result of the extensive investment we have made in recent years, and the transformational growth of our major businesses, we now have two great companies embedded within our portfolio,” he said.

“This plan would enable both to achieve their full potential and create new opportunities for our people and communities.

"In a single step, we will significantly increase BHP Billiton's focus on the exceptionally large resource basins that underpin its competitive advantage.

"By concentrating on what we do best, the development and operation of major basins, we can improve our productivity further, faster and with greater certainty.

“With a simpler portfolio, we are targeting sustainable, productivity-led gains of at least $US3.5 billion per annum by the end of the 2017 financial year."

Mackenzie added that NewCo’s assets would be more valuable in a purpose-built, independent company.

“With experienced management and a strategy and cost structure tailored to the scale of its businesses, the demerged company would be well placed to create substantial additional value for shareholders and rewarding careers for employees,” he said.

Shareholders in BHP will have to approve the demerger.



BHP shares closed 1.2% higher at $A39.61, a new 3.5-year high.