Mining giant BHP Billiton is planning to demerge some of its assets to create a new metals and mining company, with the aim to simplify its operations and focus on key commodities.
The move comes just days after the company announced it would sell its non-performing assets and focus on iron ore, copper, coal, petroleum and potash, which have generated 96% of its income in the 2014 financial year.
Valued at $12bn, the new entity named NewCo will be listed on Australia’s stock exchange and also have a secondary listing in South Africa.
The new firm will hold BHP’s aluminium and manganese businesses, Cerro Matoso nickel, Energy Coal South Africa, Illawarra Metallurgical coal and Cannington silver-lead-zinc mines.
BHP said in a statement: "With fewer assets and a greater upstream focus, the group will be able to reduce costs and improve the productivity of its largest businesses more quickly.
"As a result, its portfolio is expected to generate stronger growth in free cashflow and a superior return on investment."
The proposed demerger plan needs to be approved by shareholders and regulators.
BHP Billiton chairman Jac Nasser said: "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."
The company will be led by chairman David Crawford, who will retire from the BHP Billiton board in November to assume the new role.
BHP Billiton CEO Andrew Mackenzie said: "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.
"As we move towards a simpler portfolio, comprised of our pillars of iron ore, copper, coal, petroleum and potentially potash, we will become a higher-margin, higher-return business."