London-listed BHP has confirmed talks that could see it offload its oil and gas business
(Picture: BHP press image)Chinese economic jitters and BHP’s potential exit from petroleum deflected attention on Monday from what is expected to be another bumper week for mining industry dividends.
Commodity-focused stocks including Glencore and Rio Tinto fell more than 2% after slower growth in China’s retail and industrial production figures added to worries that the global economic rebound may not be as strong as originally hoped.
BHP, the world’s biggest miner, also fell by 1.5% or 36p to 2,286.5p even though it confirmed talks that could see it offload its oil and gas business to Woodside Petroleum in exchange for shares in the Australian company.
The review of the business, which analysts reckon could be worth as much as $17 billion (£12.2 billion), would represent a significant step in BHP’s shift away from fossil fuels.
BHP has owned oil and gas assets since the 1960s, with current assets in the Gulf of Mexico, Australia, Trinidad and Tobago, and Algeria.
AJ Bell investment director Russ Mould said: “By exiting the oil business BHP could free up funds to increase its exposure in areas like battery metals and copper where demand from the ‘green’ economy is likely to be particularly robust.”
BHP has done particularly well this year on the back of the Chinese steel industry’s need for iron ore, with the 52% price surge underpinning what should be another huge dividend when the Anglo-Australian giant publishes annual results tomorrow.
It tends to pay about 70% of its earnings, leading to forecasts for a full-year dividend of about $2 a share. Chilean copper miner Antofagasta also reports results this week.
The FTSE 100 index slid 64.17 points to 7,154.54, denting progress seen last week, as the weak Chinese economic data left luxury goods group Burberry 3% or 60p lower at 2,070p.
The UK-focused FTSE 250 index was far more resilient despite starting the week at an all-time high. It fell by 0.2%, off 38.58 points to 23,749.87 as the latest M&A developments involving publisher Future and defence firm Ultra Electronics offered support.
There was also a rise of 2.2p to 261.2p for LondonMetric Property after it unveiled the sale of a Primark distribution warehouse in Northamptonshire for £102 million.
