CHRIS UHLMANN: The world's biggest miner has defended its plan to spin off its less profitable assets into a separate company.
BHP Billiton held its UK annual general meeting overnight in London. The big miner told shareholders that the demerger will cut costs and improve profitability. It's also defended its iron ore expansion despite an oversupply which has driven prices to a five year low.
Here's resources reporter, Sue Lannin.
SUE LANNIN: BHP Billiton is splitting into two. Its less profitable commodities like aluminium, silver and some coalmines in New South Wales will be part of a new company.
Shareholders got to have their say for the first time at the company's annual general meeting in London.
BHP SHAREHOLDER: The split affects just about everyone in this room and you've carefully put up a slide about which assets are going where. But when we make a decision as to whether to sell or hold on, what we want to know is the board of the proposed new company and we would like their backgrounds please in any document that you publish.
BHP SPOKESMAN: Yeah, absolutely. Very good question and we'll cover this in due course as you would expect.
SUE LANNIN: BHP Billiton chairman Jac Nasser emphasised the benefits of the spin-off.
JAC NASSER: We can reduce costs and improve the productivity of our largest businesses more quickly. The new company will benefit from its own strategy and own systems and processes specifically tailored for a business of its scale.
SUE LANNIN: Former BHP Billiton chief financial officer Graham Kerr will become the boss of the new company.
The big miner was forced to amend plans to abandon a London stock exchange listing for new firm because of an investor backlash.
JAC NASSER: The new company's shares are intended to have a primary listing in Australia, a secondary listing in South Africa and as announced last week, a standard listing in London.
SUE LANNIN: Jac Nasser told shareholders that BHP Billiton has cut its carbon emissions and continues to support a price on carbon even though it also backed the repeal of the carbon tax.
JAC NASSER: But a carbon price alone will not be sufficient to drive the pace and scale of the global response required.
SUE LANNIN: But climate change activists like former captain of industry Ian Dunlop, who is standing for a seat on the company's board, want the big miner to do more.
IAN DUNLOP: At the outset I'd like to congratulate the board, Andrew Mackenzie and his team, for the actions that they have taken sine I raised these issues at the meeting last year. But having claimed leadership in this area, I think it's now up to the company to really face up to the real challenge we face.
SUE LANNIN: Mr Dunlop failed to get a seat on the board last year. Jac Nasser said the board was once again not endorsing his nomination.
BHP Billiton says the European economy remains soft and China's property industry is slowing down. Chief executive Andrew Mackenzie says the miner is continuing to cut costs and made money despite lower commodity prices.
ANDREW MACKENZIE: So, during a year in which the majority of commodity prices fell we still increased profitability significantly.
SUE LANNIN: Afterwards while speaking to journalists, Mr Mackenzie defended BHP's plans to increase iron ore production despite a glut of the steel making ingredient on the market.
CHRIS UHLMANN: Sue Lannin.
