BHP Billiton Shelves Sale of 'Non-core' Operation Nickel West

The world's largest mining group, BHP Billiton Ltd. (BHP) , has pulled plans to sell its Nickel West business in Australia after bids failed to meet its asking price, but indicated it was still open to offers for an operation it described as non-core.

BHP put Nickel West up for sale in May, with analysts pointing to a likely internal price expectation of between A$500 million and A$800 million ($436 million and $697.2 million). But nickel prices have since tumbled by more than a quarter, undermining the asset's valuation.

"The preferred option, the sale of the business, has not been achieved on an acceptable basis," said BHP on Wednesday, Nov. 12. "At this time, Nickel West will remain in the BHP Billiton portfolio as a non-core asset and the company will continue to operate the business to realize its full value."

The failure to sell West Australia-based Nickel West casts the operator of the Mount Keith, Cliffs and Leinster mines into a corporate limbo as BHP prepares to split itself in two, creating a new company to house second-tier assets. BHP CEO Andrew Mackenzie said in August that Nickel West needed an owner "much more committed to the nickel business" and that the operation was "neither a good fit with BHP Billiton nor with NewCo."

BHP said in May that it was in talks with potential buyers of the operation. Glencore International plc CEO Ivan Glasenberg had earlier said he was considering an offer for the unit. China's largest nickel refiner, Jinchuan Group Ltd., was also reported to be interested in at least some of the assets.

Nickel West's mining operations are considered to be mature and complex and output from its mines is in decline. Nickel West's production is likely to fall by 4% in the 2015 financial year to about 95,000 tons, BHP said in October. The unit also comes with significant liabilities of between A$1 billion and A$2 billion relating to environmental rehabilitation and closure costs.

Nickel's spot price closed Tuesday at $15,085 on the London Metals Exchange, down 28% from its two-year high of just over $21,000 on May 12, the day before BHP announced its plan to sell Nickel West.

Shares in BHP closed in Sydney on Wednesday at A$33.20, down A$0.97, or just under 3% on their Tuesday close.

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