Investors have welcomed news that mining giant BHP Billiton appears set to establish a separate $20bn company comprising its aluminium, bauxite and nickel assets.

The global mining giant issued a statement on Friday saying a demerger of assets is its preferred option after announcing in April that it is studying the next phase of simplification, including structural options.

“A demerger of a selection of assets is our preferred option,” BHP said in a statement.

Stocks rose about 2.46% on Friday afternoon after the market received news of the demerger. BHP shares rose 94c to $39.10 by 4pm.

The company says a portfolio focused on its iron ore, copper, coal and petroleum assets would retain the benefits of diversification, generate stronger growth in cash flow and a superior return on investment.

“By increasing our focus on these four pillars, with potash as a potential fifth, we will be able to more quickly improve the productivity and performance of our largest businesses,” the company said.

Since April, the company’s board has continued to study structural alternatives, which it examined at a meeting this week.

“The board expects to consider this, and other matters, when it reconvenes next week,” the company said. “If any material decisions are made, they will be announced immediately.”

It is understood that a team advised by investment bank Goldman Sachs has been working on Project River, which is examining a number of strategic options, including a demerger, for assets that do not provide adequate returns to shareholders.

Deutsche Bank analysts have said they will be looking for any portfolio restructuring, such as the widely flagged sale of the company’s Nickel West mining assets in Western Australia amid stronger nickel prices, when the company delivers its annual financial results on Tuesday, 19 August.

Some of the largest shareholders in BHP welcomed the announcement.

“It’s good to see BHP taking the lead in the sector on this. It reassures you as a shareholder. It makes me more willing to have it as a significant bet within my fund,” said Christopher Moore, from Fidelity Global Industrials fund.

“Really we should see more of this in the mining sector. I would expect others to take BHP’s lead. Rio Tinto, Anglo American could also follow suit.”

Anglo American and Rio Tinto have both said they would focus on the parts of their portfolio that could deliver higher returns. BHP is relying on iron ore for the lion’s share of its 2014 ¬earnings after beating its own guidance for full-year output.

Neil Boyd-Clark, a portfolio manager at Arnhem Investment Management, which owns shares in BHP, said spin-offs had the potential to “crystallise value”.