BHP Billiton Ltd (ASX: BHP, NYSE: BHP) reported fiscal 2012 first-half earnings that disappointed some. Nonetheless, its stock has still returned 12 percent this year, largely on the continued strength and growth of its iron ore and metallurgical coal operations.

Both of these are crucial elements in manufacturing steel, which remains in very high demand in developing Asia. The massive focus on these resources has triggered speculation that BHP may be ready to sell mines and other assets producing commodities considered less “core.”

The company has an estimated USD10 billion worth of producing assets for aluminum, nickel and zinc as well as smelters deemed easily salable. And management has indicated it may pull back sharply on the aluminum business, where it has operations and assets worth an estimated USD2.2 billion. Proceeds would go to fund the company’s aggressive expansion projects, including the giant Olympic dam in Australia. BHP has also exited the titanium metals industry and is rapidly shifting its development of USshale reserves from natural gas to oil and other liquids.

Cash flow for the half-year ended Dec. 31, 2011, was up 8 percent to AUD18.7 billion. That lagged some expectations but it affirmed the success of long-term strategic initiative, such as 10 percent growth of iron ore output in recent years. Iron ore organic output is anticipated to grow just 4 percent annually over the next several years.

Given the company’s size and output volumes now, however, that’s quite robust and a major part of the company’s estimated AUD20 billion in planned calendar 2012 capital spending.

First-half profit was 5.5 percent lower on rising costs, lower output and lower prices for base metals. But this operation will have progressively less impact on earnings going forward as it’s downsized and as core iron ore and other operations grow. Management also hinted at more acquisitions, a strategy with many long-term positives. I expect BHP to continue its growth momentum in 2012.