JOHANNESBURG (miningweekly.com) – Mining giant BHP Billiton on Monday said any potential benefits of implementing a proposal tabled by minority shareholders Elliott Associates and Elliott International would be significantly overshadowed by the costs and associated risks of the suggested changes.

The New York-based fund manager earlier on Monday presented a proposal outlining changes to the diversified miner’s dual-listed company (DLC) structure, asset portfolio and capital management, which BHP believed could put at risk the foundations already laid for substantial growth within the base value of its operations.

“BHP regularly reviews opportunities to create value. Those reviews have included the key elements of Elliott’s proposal. We have had dialogue with Elliott over many months, consistent with our commitment to shareholder engagement,” BHP said in a statement on Monday, following the release of the proposal.

However, a review of the elements of Elliot’s proposal, which Elliot believed could potentially unlock up to 51% of value to company shareholders, revealed that the risks far outweighed the benefits.

While the company kept its DLC structure under review, no sufficient benefits have been identified to warrant its costly replacement with a single UK-domiciled company, with a primary listing in London and with chess depository instruments quoted in Australia, as suggested by Elliott.

“The unification of the DLC in the manner proposed by Elliott would require approval by the Australian Foreign Investment Review Board,” BHP pointed out.

Defending its shareholder returns policies and buybacks, the mining major cited returns of $23-billion in buybacks of BHP shares, and about $56-billion in cash dividends since the formation of the DLC in 2001.

Under BHP’s updated dividend policy, shareholders now receive a minimum 50% of underlying earnings as a dividend each period.

“Consistent with its capital allocation framework, BHP assesses the value buybacks could create compared with the competing objectives of strengthening the balance sheet, investing in growth or making additional dividend payments,” BHP argued.

Elliott’s proposal of BHP buying back shares was based on a formulaic approach without regard for the cyclical nature of the resources industry or the returns available from other uses of cash, the company added.

Further, BHP had, since 2013, reduced the number of assets in its portfolio by more than one-third, through the demerger of South32 and the sale of over $7-billion of assets, and had reduced unit costs by more than 40%.

Another proposal by Elliott – the demerger of BHP’s US Petroleum assets into an entity to be listed on the New York Stock Exchange – was also dismissed by BHP.

“Elliott’s demerger proposal is based on a view that investors would ascribe a higher value for these assets in a separately listed entity. There is no obvious discount in BHP’s trading multiples relative to the weighted average of relevant mining and oil and gas peers,” the company explained.