BHP Billiton (NYSE: BHP - News) , the world's biggest miner, said on Tuesday night that it would return an extra US$10bn to shareholders after announcing that its chief executive would retire.

The Melbourne-based and UK-listed company reported a 41 per cent jump in first-half net profit to US$6.17bn from US$4.36bn a year earlier on higher metal prices and said China would continue as the main driver of demand for raw materials.

BHP said Chip Goodyear, who had been with the group for nine years, would retire by the end of 2007 and that it would look both within and outside the company for a replacement.

The huge increase in the mining group's capital management programme – by more than four times to US$13bn – would be carried out through a series of buy-backs over the next 18 months, beginning with a US$2.5bn off-market buy in Australia.

Analysts said the buyback, which surprised the market in its scale, indicated the company's confidence in its future outlook

"It is pretty amazing, and basically what they are saying is they are confident to generate an awful lot of cash over the next 18 months, and they are happy it give it back to shareholders," said Mark Daniels, director equities with Aberdeen Asset Management.

Shares of BHP rose as much as A$1.44 or 5.4 per cent on the announcement to A$28.12 in early trading Wednesday on the Australian Stock Exchange.

As with rival London- and Sydney-listed Rio Tinto, which last week reported a 25 per cent gain in half-year profit to US$3.59bn, BHP's base metals division and petroleum unit made a weighty contribution to the interim result.

BHP, which has a US$17.5bn pipeline of 29 projects in execution or at a feasibility stage, increased its first-half dividend 14 per cent to 20 cents.

Analysts said favoured internal candidates to replace Mr Goodyear include Marius Kloppers, group president of base metals, and Chris Lynch, who heads up the miner's carbon steel materials division.

Mr Goodyear, who in 2005 oversaw the A$9.2bn takeover of WMC Resources (NYSE: WMC - News) , the Australian base metals and uranium giant, dismissed suggestions that the handover at BHP would distract it from pursuing acquistions and that the company had not been aggressive enough in pursuing growth.

"Mergers and acquisitions aren't on hold," he told a briefing in Melbourne. "You will find us as aggressive as anyone but it is important to know you can't rush this investment process."

We do look for opportunities to acquire things, but we look for value and that is the ultimate driver, whether it is organic or mergers and acquisitions," Mr Goodyear said.

Rob Clifford, senior mining analyst at ABN Amro in Melbourne, said the share buyback didn't preclude BHP from making future acquistiions.

"Ideally, BHP would invest [additional capital] into higher returning mines but they already have more than US$17bn of projects in the pipeline," he said . "Mining personnel from project managers down to welders are already flat out. They can't spend the money any faster."

Mr Goodyear reaffirmed BHP's commitment to its assets in the Gulf of Mexico but declined to comment on market speculation that the operation could be sold to France's Total to fund an approach to Rio Tinto or Anglo American.

The miner said in the short term it expected global growth to moderate but that the outlook for the global economy remains encouraging. "China is set to continue as the main driver of demand, but more mature markets may also lend support, especially Europe and Japan," the company said.

"While we expect growth for the US economy to be below the rate in 2006, a soft landing in the housing sector, strong capital investment and an easing of energy prices should result in a growth rate consistent with long term trends."

BHP's base metals unit contributed US$2.9bn, or 32 per cent to pre-tax profit, while its petroleum unit added US$1.6bn, or 18 per cent. It said that in 2006 real annual average prices for copper, zinc, iron ore, coking coal, thermal coal, crude oil, natural gas and uranium reached their highest levels in three decades.