BHP Billiton has rejected a proposal from Elliott Management for spin-off of its $22bn worth petroleum assets in the US.

Based on a review, the Australian-based mining, metals and petroleum company said that the costs and risks associated with the demerger proposal from the activist investor would considerably outweigh any possible benefits.

Elliott Associates and Elliott International had earlier written a letter to BHP Billiton outlining proposed changes to the company’s Group’s Dual Listed Company (DLC) structure, capital management and asset portfolio.

BHP Billiton was advised by Elliott to replace the DLC with a single company domiciled in the UK. Elliott wanted the new company to have a primary listing in London and its Chess Depository Instruments quoted on the Australian Securities Exchange.

The multinational company said that although it was reviewing the DLC structure, it could not identify enough benefits to score over the significant expenditure spent in the DLC unification.

Further, it stated that the unification method proposed by Elliott would need an approval from the Australian Foreign Investment Review Board.

BHP Billiton added that in the last four years, it had trimmed its portfolio by more than one third by the sale of more than $7bn assets in the US and the demerger of South32.

A statement from the company in this regard read: “We have reduced unit costs by more than 40 per cent. Under BHP Billiton’s updated dividend policy, shareholders now receive a minimum 50 per cent of underlying earnings as a dividend each period.

“We have introduced a rigorous capital allocation framework, which balances value creation, cash returns to shareholders and through the cycle balance sheet strength in a transparent and consistent manner.”