Melbourne, Dec 20: Australian steel, mining and oil giant The Broken Hill Pty Co Ltd (BHP) has invited bids for a tenth of its assets, saying A$4 billion ($2.6 billion) in asset sales were not out of the question.

The struggling blue chip, which this year turned from a firm favourite of the local share market to an also-ran, made the comment after reporting better-than-expected half-year earnings.

BHP reported a net profit of A$793 million for the six months ended November 30, including A$99 million in one-off gains. Though roughly level with the half-year result from a year ago, it well exceeded forecasts.

BHP's core minerals and petroleum assets again shone in the group's profits, especially its Australian and Irish Sea oil and gas fields, its Australian coal and iron ore businesses and its majority-owned low-cost Escondida copper mine in Chile.

Managing director John Prescott said BHP would build its future around these assets and that it was ready to sell both non-core and poorly performing businesses.BHP has total assets of about A$37 billion.

"Anything that does not give us the performance that shareholders expect will be reviewed and will be put up for sale," Prescott told Reuters Financial Television.

He was asked to comment on brokerage analysts' predictions that BHP could shake another A$4 billion from its balance sheet.

"It's hard to answer that question but I can say that in the last 18 months or so we have sold about A$3 billion worth of assets...so the magnitude that you referred to is not out of court," he replied.

They have fallen in six months from A$20 due to weakprofits, high costs, management unrest and low commodity prices.

"It's a pretty good number," said BZW Australia's BHP analyst Andrew Hines of the half-year result.The copper division was the weakest performer for BHP, the world's second biggest producer of the metal. Even with the Escondida mine, its poor profit was expected.

BHP's big Ok Tedi copper mine in Papua New Guinea has been crippled by drought since August, losing the group A$43 million. The mine's only supply line, the Fly River, has dried up.

Mining costs at BHP's North American operations were also a headache and were operating at average cash costs of around 80 US cents per pound, slightly above the prevailing cash price.

But BHP's other divisions were stronger than forecast. "Minerals was slightly stronger, coal was a good result, steel was above expectations and petroleum was where the main boost came from," BZW's Hines said.

Asia's economic crisis also pinched BHP's bottom line, shaving A$17 million off the half-year result, though the low Australian dollar helped boost sales overall.BHP sells about 30 per cent of its production into Asia, but said the impact had been mainly confined to its Southeast Asian steel operations -- which are themselves candidates for sale.

"There will be some additional adverse impact for BHP," Prescott said. But he added BHP would respond by trying to switch some sales volumes from Asia to other offshore markets.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.