BHP Billiton on Tuesday said it planned to create a new global metals and mining company based on a selection of its aluminium, coal, manganese, nickel and silver assets.
The demerger will leave BHP Billiton almost exclusively focused on its long-life iron ore, copper, coal, petroleum and potash basins, the group said.
The new company will be listed on the Australian stock exchange, with a secondary listing in Johannesburg, South Africa.
BHP shares sank to the bottom of the FTSE 100 following the news, down 2.6 percent shortly after the market open.
"I think the market is disappointed by the fact that there's no announcement of a share buyback," Yannick Naud, Portfolio Manager at Sturgeon Capital told CNBC. "The investor needs to get some money back, whether it's share buyback or dividend."