BHP Billiton, the world's most valuable miner, is to break itself up via a stock market spin-off, signalling an end to years of deals and expansion driven by the commodities boom.

Heeding investor calls for resources groups to improve returns amid weaker commodities markets, BHP set out plans to improve its performance by demerging its less profitable mines and processing plants.

The spin-off of a new company, with an estimated value of about $13 billion, will unwind a large part of the 2001 merger between BHP and Billiton, a landmark mining deal that heralded more tie-ups in the sector and years of China-led growth in commodities markets.

BHP and its rivals spent much of the next decade scrambling to acquire assets to satisfy China's hunger for metals such as iron ore and ­copper. However, since 2012 a generation of deals-driven leaders – including Tom Albanese at Rio Tinto and Cynthia Carroll at Anglo American – has been forced out amid poor investments and huge cost blowouts.

Marius Kloppers – who as BHP's chief executive tried to buy Rio, its closest rival – also left last year.

BHP's demerger plans, unveiled yesterday by Andrew Mackenzie, Mr Kloppers' successor, underscore the changing mood in mining over the past 18 months as new chief executives have promised more careful investments and better returns.

Share buyback

But the Anglo-Australian group disappointed investors by failing to offer plans to return cash, with Mr Mackenzie admitting a share buyback had been blown off course this year by weaker commodities markets, particularly in iron ore.

“Even though we have done a great job in terms of generating a lot of extra cash through increasing productivity and reducing capital, that has not been quite enough to compensate for the significant reduction in prices,” he said.

“We are not quite there yet in terms of what we thought the balance sheet would need to look like . . . to start a new form of capital management that we felt we could endure for years.”

BHP shares fell nearly 5 per cent in London as investors digested the miner's plan to use exchanges in Australia and South Africa to list the company holding the demerged assets. The spin-off is expected to be completed next year.

The proposal will mean some UK investors with no mandate to hold non-UK stocks will have to sell the new group’s shares when it lists. – (Copyright The Financial Times Limited 2014)