Mining giant under fire from US hedge fund

One of the world’s biggest miners has come under attack from a voracious new York hedge fund with a reputation for instigating changes at companies.

Bosses at BHP Billiton have been forced to defend the way they run the business following criticism from elliott Advisors.

The American hedge fund, which is owned by billionaire Paul elliott Singer and has a 4.1pc stake in BHP, is calling on the miner to spin off its US oil assets after highlighting ‘inefficiencies’ at the firm.

elliott said BHP’s US oil business, which consists of share assets and offshore oil projects, provided ‘no meaningful diversification benefits’ to BHP’s wider metals and petroleum business. As a result it said the division, worth £17.7bn, would be better off as a separate business in new York.

elliott also called on BHP to com- bine its two businesses in Sydney and London into one group based in Australia and traded in the UK, claiming it would make the firm more tax-efficient and could boost shareholder returns by about 50pc.

Shares in BHP jumped 2.2pc, or 28.5p, to 1316p as a result but it has rejected elliott’s plans, saying the costs far outweigh the benefits.

The miner said it had been engaged in dialogue with elliott ‘over many months’ but knocked back the proposal after assessing the risks it would pose. It added that since 2001 it has returned around £19bn to shareholders in buybacks and about £45bn in cash dividends. The miner has already taken steps to trim its portfolio after spinning off its minor metals business into a London-listed company called South32 in 2015.

South32’s shares have since outperformed BHP, which is believed to have spurred elliott’s intervention.