Posts tagged 'BHP Billiton'

Taking the Billiton out of BHP (and UK shareholders) – Part II

We have no idea if Andrew Mackenzie, the Scottish-born chief executive of BHP Billiton, is favour of independence.

But UK shareholders will certainly get the rough end of the pineapple if the FTSE 100 mining giant goes ahead with its proposed demerger of non core assets, announced on Tuesday: Read more

Taking the Billiton out of BHP

Nothing has been decided yet, but it looks increasingly like BHP Billiton is going to spin off its unwanted smaller assets in a new company — effectively undoing another dud mining industry deal what’s left of its 2001 merger with South Africa’s Billiton.

But lots of questions remain unanswered. Two stand out in particular: What does this mean for a share buyback and what will PLC shareholders get out of it? (Remember BHP is a dual-listed company with Ltd shares in Australia and PLC shares in the UK). Read more

The best laid plans of miners and men

It was supposed to be one of the best trades of 2013 – buy mining stocks to get leveraged upside to the global economic turnaround. But as we approach the end of the first quarter, only one half of that equation is working. The world economy is recovering strongly but the big miners are being well and truly left behind – Australian Financial Review.

Yep, the miners as a ‘leveraged play on global growth” is not going exactly to plan: Read more

Xstrata 2.0 (or what Mick did next)

What now for Xstrata CEO Mick ‘The Miner’ Davis?

Bloomberg thinks it has the answerRead more

The Rio Tinto domino

John Kemp at Thomson Reuters has pointed us in the direction of colleague Clara Ferreira-Marques’ piece on the likely repercussions of Rio Tinto’s $14bn revaluation of aluminium and coal assets last week. As she notes, it’s almost certain that Rio Tinto’s hit will now set the stage for a wave of writedowns across the industry. Read more

BHP against the iron ore price

Here’s a cracking little story from Reuters on what seems to be BHP Billiton’s single-handed attempt to prop up the iron ore price this week.

As they reported on Thursday:

SINGAPORE, Jan 17 (Reuters) – BHP Billiton, the world’s No. 3 iron ore miner, bought 100,000 tonnes of the raw material on the spot market in a rare move that traders interpreted as a strategy by producers themselves to stem a decline in prices as Chinese demand thins. A rally that carried iron ore prices to 15-month highs last week was a boon for miners such as BHP , but took the market by surprise, scaring off buyers in top consumer China.

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The spent force in iron ore?

We are, of course, talking about Fortescue Metals Group, the self-styled New Force in Iron Ore.

In spite of Tuesday’s cost cutting measures and Wednesday’s US$300m sale and leaseback of a power station, its share price has taken another shoeing. Read more

BHP’s Olympic Dam plans on hold

BHP Billiton is taking a step back from its planned $20bn expansion of its Olympic Dam copper and uranium mine — as many had suspected it might.

The company wrote down $346m on its investment so far in the South Australian project. That, combined with writedowns on its North American shale gas assets, led to a 21 per cent decline in its full-year profit after tax. Read more

Australia’s capex cliff

Here’s a bold call: the developed world’s fastest growing (that’s Australia for those of you at the back of the class) will fall in to recession next year as the China-driven mining investment boom ends.

Given the recent declines in Chinese steel prices and spot iron ore price, Deutsche Bank economist Adam Boyton reckons Australia’s terms of trade (the price of exportable goods divided by price of importable goods) could be 15 per cent lower year-on-year by the fourth quarter. Read more

BHP’s untimely dilemma: shrinking cash flows

As low cost producers, with arguably the best resources  in the world, it’s little wonder that BHP Billiton and Rio Tinto are shipping as much iron ore as they possible can from their mines in the desolate Pilbara region of Western Australia.  Assuming a $7/tonne freight rate, Lex estimates, the landed iron ore price in China would have to fall to $37/t before Rio lost out.

So even with the iron price at a near three-year low of $112 , Rio and to a lesser extent BHP are making a killing and will continue to do so as higher cost producers (mainly Chinese) fall by the way side. Read more

The Aussie dollar – from South Pacific peso to Southern franc

It can’t be much fun being an Australian in London at the moment. (Trailing the Brits is one thing, but lagging the Kiwis in the medal table must really hurt.)

But at least our antipodean visitors can afford to indulge in a little retail therapy at Westfield Stratford City (the Australian dollar is trading close to a record high against the British pound) or, if they are really embarrassed, hop on the Eurostar to Paris (where the dollar hit a record high against the eurothingy just last week). Read more

The capital spending crisis, miner edition

An interesting column from Clyde Russell at Reuters (H/T John Kemp) pointing out the key problems facing miners today. They can’t get sufficient returns on capital invested, so should they even bother trying?

From Russell: Read more

Steel demand is endless

A BHP executive’s comments about Chinese steel demand growth flattening have gone viral, with lots of market reports pointing to Ian Ashby’s words to explain European markets closing lower yesterday and falling Asian stocks today.

From the Australian Financial ReviewRead more

The supercycle is so over, iron ore edition

From Bloomberg:

BHP Billiton, the world’s biggest mining company, said China’s steel production is slowing as the world’s fastest-growing major economy starts to shift to focus more on consumers than large building projects. Read more

BHP says Xstrata Glencore deal makes little difference

BHP Billiton, the world’s biggest mining company, sees no reason to change its strategy in light of Glencore’s proposed merger with Xstrata, the FT reports. “People have asked me does this deal make a difference to you, and I would say it doesn’t make difference to our strategy, it doesn’t make a difference to our philosophy,” Marius Kloppers, BHP’s chief executive, said on Wednesday after the release of interim results. His comments came after BHP reported a 6 per cent rise in half-year underlying earnings before interest and tax to $15.7bn, a result that was slightly ahead of analyst forecasts. Record production from BHP’s iron ore mines in Western Australia and a gain in bulk commodity and petrol prices were behind the rise.

BHP raises iron ore production forecasts

BHP Billiton, the world’s biggest mining company, has increased forecasts for its iron ore division after a record-breaking performance from its operations in the Pilbara region of Western Australia. The FT reports BHP said it had mined 41m tonnes of iron ore in three months to the end of December and now expected full year production to exceed its previous guidance of 159m tonnes. Analysts had expected BHP produce around 39m tonnes of ore during the quarter. Iron ore is BHP’s biggest business and is forecast to account for 40 per cent of group earnings before interest in the 2011/12 financial year. The news help allay mounting concerns about China’s appetite for iron ore, a key ingredient in steel making.

BHP puts diamonds division up for sale

BHP Billiton has put its diamonds business up for sale at a time when expectations of rising long-term demand for the precious stones are unleashing tectonic changes in the world’s diamond industry, the FT reports. The world’s biggest mining company by market value said on Tuesday it would review options for the Ekati mine in northern Canada, the only diamond mine in its portfolio. This could to lead to a sale of its diamonds business over the next two months. “Potential transactions arising from the review will be subject to detailed analysis before a final decision is made,” BHP said. It expects to complete the process by the end of January 2012. Potential buyers include Rio Tinto and Anglo American. Anglo is positioned to become the world’s biggest diamond miner by production, after it bought a controlling stake in De Beers for $5.1bn this month. Diavik, Rio’s diamond mine in Canada, is close to the Ekati mine in the semi-arctic diamond fields north of Yellowknife, Northwest Territory. Former and present employees of both Rio and BHP have said privately that the companies have for years studied proposals to combine the assets.

BHP names Kerr new CFO

BHP Billiton, the world’s biggest mining company, named Graham Kerr as chief financial officer to succeed Alex Vanselow, reports Bloomberg. Mr Kerr, 40, joined BHP in 1994 and was most recently president of diamonds and specialty products. The company said Mr Vanselow, a Brazilian national who has been chief financial officer since 2006, is leaving from February 2012 to pursue personal business interests. He told reporters he was interested in becoming chief executive of another publicly listed company.

Snap news

Breaking pre-market news on Monday,

– BHP Billtion to plough $4bn into US  shale gas — statementRead more

Steeling for more commodities volatility

Remember when Vale and BHP, two of the world’s biggest iron ore miners, changed their pricing contract methods with China and Japan?

The move from annual to quarterly contracts came amid resurging Chinese demand for iron ore, which put the miners in a powerful position. Read more

Dear Lloyds: nobody wants to buy your bank

— By Neil Collins —

Dear Lloyds: nobody wants to buy your bank Read more

Blood and iron (ore)

It was only a couple of months ago that Vale was talking up iron ore prices out to 2015 and beyond, and analysts were saying the discount being applied to company shares on expectations of a glut were too steep.

Moreover, Marius Kloppers and Tom Albanese were both cautioning that building up the planned new capacity that might take longer than expected. Read more

BHP profits jump 86%

BHP Billiton, the world’s largest mining company, reported an 86 per cent rise in its annual net profit on Wednesday and said it expects commodities demand to remain strong despite China’s efforts to cool its economy, the WSJ reports. The Melbourne-based company blamed global imbalances and high levels of sovereign debt in the US and Europe for continuing to create uncertainty. The company called on policy makers to make a coordinated response that “has the potential to engender confidence and ease the volatility” in markets. They added that fixed-asset investment in China, which has been the engine of global growth since the financial crisis, has yet to fully reflect Beijing’s moves to tighten monetary policy and rein in excessive lending, it added. “Despite these near-term challenges, we remain positive on the longer-term outlook for the global economy,” BHP said in a statement. Overall, BHP’s net profit rose to $23.65bn in the fiscal year ended June 30, bolstered by strong iron prices, compared with a net profit of $12.72bn a year earlier. Full-year revenue rose 36 per cent to $71.74 bn.

Snap news

Breaking pre-market news on Wednesday,

– Ageas takes gross Greek bonds impairment of €328m and initiates share buyback — statement and statementRead more

Canaries and mines

Nothing has been harder hit in the current market swoon (in London at least) than the mining sector.

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Resources hit hard by market slump

Even by the standards of the recent financial crisis, Thursday’s sell-off in stock markets was sizeable, the FT says. The growing nervousness over the debt crisis in Europe, the risk of a “double-dip” recession in America and a view among investors that policymakers, including the Japanese government and European Central Bank, had failed to shore up confidence accelerated this week’s sell-off. The worst hit stocks were those of the world’s big natural resources groups, including miners, oil companies and traders. Despite the prices of many commodities remaining near recent highs, their shares prices tumbled, sending valuations to the lowest levels of the year. Even gold started selling off like any other risky asset on Thursday, reports the WSJ. In Sydney on Friday, resources stocks continued to be pounded with BHP Billiton off 4.1 per cent and Fortescue Metals Group down 6 per cent.

BHP Billiton declares force majeure at Escondida

BHP Billiton has declared force majeure on exports from the world’s biggest copper mine, the FT reports, as a mineworkers’ strike entered its eighth day. The strike at BHP’s Escondida mine in Chile, which supplied 7 per cent of the world’s copper last year, comes in a month of widespread mining strikes from Indonesia to South Africa. Early on Friday in Singapore, three-month copper LME futures rose to their highest level since April, Reuters says.

Strike at BHP Chilean copper mine

Workers at the world’s biggest source of copper, BHP Billiton’s Escondida mine in Chile, began striking late on Thursday, Bloomberg reports.  The strike is planned to last 24 hours, leading to about 3,000 tonnes of lost copper production. Strikes are also planned in seven of BHP’s central Queensland coal mines in Australia, beginning next week, the news agency says. The industrial action in the flood-ravaged state is expected to drive coal prices higher.

Robust BHP output bodes well for profits

BHP Billiton said iron ore production rose for an 11th consecutive year, in a market update that underlines confidence the mining giant will next month report a near doubling in financial full-year net profits to $23bn, the FT reports. Shares in the Anglo-Australian listed miner rose nearly 2 per cent to A$43.44 by the Sydney close on Wednesday after BHP said that in addition to iron ore it had set annual production records for the period ended June in manganese ore, parts of its nickel unit and in natural gas. BHP’s natural gas division was boosted by a maiden contribution from the $4.7bn acquisition earlier this year of Arkansas-based shale gas assets from Chesapeake Energy of the US. The miner last week placed another large bet on the US shale gas industry when it announced an agreed $12.1bn for Houston-based developer Petrohawk. The miner’s annual production of iron ore rose 8 per cent to 134m tonnes, while growth of 7 per cent in the four quarter compared with the third came in spite of a disruption caused by a train derailment.

Marius Kloppers finds something to buy

Here it is:

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