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BHP bows to pressure and offloads shale in US

The Samarco disaster killed 19, left 700 homeless and sparked global protests against BHP and its partner Vale: Mario Tama/Getty Images
The Samarco disaster killed 19, left 700 homeless and sparked global protests against BHP and its partner Vale: Mario Tama/Getty Images

Mining giant BHP Billiton today caved in to pressure from activist investor Elliott Advisors to sell its US shale gas business.

Elliott, which owns 5% of the Anglo-Australian mining giant, has been agitating since April for the world’s largest miner to change its strategy and return money to shareholders.

BHP Billiton went into US shale at the peak of the fracking boom in 2011.

The business has since been hit by the slump in global oil prices and was forced to take a $7.2 billion (£5.6 billion) writedown last year.

BHP’s outgoing chairman Jac Nasser, who retires this year, recently conceded that BHP’s $20 billion investment in shale was a mistake.

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But BHP resisted Elliott’s other demand to commission an independent review of its oil business.

Analysts welcomed news of the sale, although the business is likely to sell for about half what the miner put into it.

BHP has clawed its way back to financial health after it took huge charges over the Samarco dam disaster in Brazil, in November 2015, which killed 19 people, left 700 homeless and sparked global protests against the firm.

The final date for negotiation of a settlement over Samarco, which was 50% owned by BHP Billiton and 50% owned by Brazilian miner Vale, has been pushed back to October.

BHP’s pre-tax profits for the year to June 30 swung from an $8 billion loss to a profit of $10.3 billion, as the miner benefited from stronger commodity prices. It is raising its dividend by 10 cents a share. Shares rose 41.62 ,or 3%, to 1407.5p.