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BHP to exit shale within two years, sell nickel assets

The company’s gas-rich Fayetteville field in Arkansas is one of the assets on the block. (Image courtesy of BHP.)

World’s largest miner BHP (ASX, NYSE:BHP) (LON:BLT) expects to fully divest its US oil and gas business, which it acquired in a $20 billion deals spree in 2011, and is also seeking a buyer for its nickel business in Australia.

The announcements, made by chief executive Andrew Mackenzie during a conference call with investors and media on Thursday, come on the heels of global fund manager Aberdeen Standard Investments decision to fully support activist investor Elliott Management’s push for widespread structural changes at BHP.

Aberdeen is the third-biggest shareholder in BHP, with a 4.9% holding, just behind Elliott, which has a 5.04% stake in the group.

Chief executive Andrew Mackenzie told reporters the company had now a ‘strong sense of urgency’ when it came to selling its US oil and gas business.

The Anglo-Australian mining giant has been under pressure from Elliott Management to rethink its investment in oil and boost shareholder returns.

Announcing its annual results in August, BHP said it would sell its loss-making US shale unit, which it had identified as a non-core business. On Thursday Mackenzie stressed the company was “very” determined to divest those assets.

“We have a strong sense of urgency,” Mackenzie told reporters following the company’s annual general meeting in Melbourne.

BHP’s bet on US shale oil and gas six years ago, at the height of the fracking boom, turned the company into a top-10 producer in the country. The oil market downturn that followed, however, led to billions of dollars of impairments and write-downs of about $13 billion.

Mackenzie also revealed the group has put its nickel business in Western Australia on the block. Surging prices for the metal should make Nickel West an attractive option for potential buyers as the commodity, a key component in the making of lithium batteries, is up around 16% so far this year.

Nickel climbed to $13,030 a tonne in intraday trading on Nov. 1, the highest in more than two years, and it was trading just above $12,000 per tonne in London Thursday.

BHP’s Nickel West is a fully integrated mine-to-market business that includes mines, concentrators, a smelter and a refinery.