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Iron ore prices Prices for iron ore in the last six months have been hit by restocking activity in China, said Chief Executive Officer Marius Kloppers. "This destocking, coupled with lower steel demand from Europe, India and the Middle East, led to a sharp decrease in the price of steelmaking raw materials," he said. While restocking has commenced and is largely complete, BHP doesn't expect any material pricing upside in the near term, he added. Nevertheless, the CEO sounded cautiously optimistic about the Asian powerhouse, saying: "China's GDP growth is expected to range between seven and eight per cent in the coming years. While this is lower than the double digit growth rates seen over the past decade, it is coming off a much larger base and will still underpin strong underlying growth in commodities demand. China's unique and substantial industrialisation and urbanisation continues to give us confidence in the long-term outlook." Kloppers highlighted the company's diversified portfolio, which he stressed means it is "poised to capture the opportunities presented by markets in all stages of the demand cycle". "[...] Our portfolio is perfectly suited to the economic conditions that lie ahead, and it is for this reason we are even better placed to outperform our peers over the next decade, and well into the future," he said.
Diversified mining giant BHP Billiton sounded a cautious note on the global economy in its annual general meeting on Thursday, saying that while there have been signs of stabilisation, markets are still tough. Chairman Jac Nasser said that financial and economic problems continue to be felt across the world and "it's difficult to predict how and when they will be resolved but we do expect it to take considerable time". He said that high public debt levels in both the US and Europe "need to be addressed" to ensure a firm recovery in these economies. Furthermore, while China remains the driver of growth, growth has been slower as of late. "This is primarily driven by the Chinese Government steering the economy to more sustainable long-term growth. It is also due to the cyclical and structural challenges being faced in both the domestic Chinese economy and global markets. This in turn has raised questions about China's future demand for natural resources." He admitted that the growth levels seen in the past decade in China cannot continue, though the further urbanisation and industrialisation in the country should support future growth in demand for commodities. Nasser: "Today we are four years into the global financial crisis. Given the fundamental shifts taking place, the low levels of growth in many developed countries and the volatility in just about every facet of life, from stock markets to politics to the weather, the business world is as tough as ever. Our industry is particularly challenging."
Positive Points: CEO Jac Nasser said global energy demand was expected to increase by more than one-third over the next two decades, and China, India and the Middle East were expected to account for 60% of that growth. As confirmed at last month's production report, the majority of the group's projects in execution (20 major projects currently in execution with a combined budget of $22.8 billion) are scheduled to deliver first production before the end of the 2015 financial year. BHP Billiton has approved eight major projects during the 2012 financial year for a total investment commitment of US$7.5 billion. The board has recently placed a greater emphasis on controlling costs. An assessment of more non-core products and operations continues to be made by management. BHP benefits from a uniquely diversified portfolio that reduces its exposure to any one commodity or currency. The company is a potential beneficiary of any broad recovery of the global economy.
Negative Points: BHP will recognise impairments at its US Fayetteville gas asset by US$1.8 billion after tax. The write down was due to a significant drop in gas prices following an unusually warm winter in the US and increased natural gas supply, which together caused an imbalance in the gas market, added the company. Cost pressures for both BHP and the wider industry continue to be seen. Higher fuel and energy prices (of which BHP Billiton is a net beneficiary), together with increased maintenance, labour and contractor expenses continue to provide cost pressures. Natural events such as the recent floods in Australia could impact on production. Currency movements provide potential headwinds. Attempts to substantially expand the company have failed, including a proposed merger with giant rival Rio Tinto. As such, the opportunity to remove significant costs has been lost. Costs in relation to each failed deal, including potential fees to investment bank advisers, have been suffered.
AGM: BHP Billiton registers a strong operational and financial position. At the group's Annual General Meeting held in Sydney, Australia, the company reported that it had achieved a very robust set of financial and operational results, notwithstanding significant volatility in commodity prices, higher capital and operating costs, stronger producer currencies and regulation. Within this environment, the company reported a profit of US$15.4 billion after exceptional items and a net operating cash flow of over US$24 billion. A strong balance sheet enabled it to retain a solid 'A' credit rating, added the group. Discussing the current global economy, Jac Nasser, BHP’s Chairman said “While there are some signs that the global economy is stabilising, uncertainly and government debt continue to be the most pressing challenges". Alluding to the downturn of the European economy and cautious consumers and high unemployment figures in the US, Nasser said "a sharp improvement in economic growth remains unlikely". However, with China still driving much of the world's growth, even though it has slowed to more sustainable rates in recent times, the demand for natural resources is still there. Nevertheless, the world’s largest miner said it was well positioned to reap the benefits of China's longer-term economic growth, with copper, energy products and potash fertiliser all expected to flourish.
Company overview The Group's principal activities are exploring for, developing, producing and processing minerals, oil and gas. The Group's operations are divided into nine business divisions. Base Metals focuses on copper, silver, zinc, lead, uranium and copper by-products including gold. Petroleum focuses on hydrocarbons covering oil, gas and liquefied natural gas. Aluminium relates to bauxite, processing and marketing of aluminium and alumina. Iron Ore focuses its mining activities in the areas of Western Australia and Brazil. Energy Coal focuses on energy coal for use in electricity generation. Metallurgical Coal operates three underground coal mines in Australia. Manganese focuses on alloys, ores and metals. Stainless Steel focuses on nickel minerals which are used in the production of stainless steel. Diamond and Specialty Products operates a diamond mine in Canada and an integrated titanium smelter/mineral sand mines in South Africa. The group employs around 41,000 people working in over 100 operations in 25 countries.
"The mine's success is a credit to the people who work there, at Yellowknife and with the marketing team in Antwerp. Harry Winston has long experience in the Canadian diamond industry and their commitment to study further development at EKATI could help extend the mine's contribution to Northern Canada for many years to come." The sale is subject to the approval from regulators but BHP expects it to complete in the first quarter of 2013.
Mining giant BHP Billiton is to sell its diamonds business to Toronto-headquartered diamonds group Harry Winston for half a billion dollars, the company announced on Tuesday afternoon. Under the terms of the $500m cash sale, Harry Winston will take over BHP's interests in the EKATI Diamond Mine and Diamonds Marketing operations, and will assume all of its obligations under EKATI's agreements with the Canadian government. All BHP employees associated with the diamonds subsidiary will move over to Harry Winston. The divestment will see BHP take an impairment of $200m after tax to the value of the asset which will be reflected as an exceptional item in the group's results. The EKATI mine is located nearly 200 miles north-east of Yellowknife in the Northwest Territories of Canada. Tim Cutt, the President of BHP's Diamonds & Specialty Products division, said: "We are very proud of EKATI's track record and the substantial value it has created for the region and our shareholders.
Positive Points: The majority of the group's projects in execution (20 major projects currently in execution with a combined budget of $22.8 billion) are scheduled to deliver first production before the end of the 2015 financial year. BHP Billiton has approved eight major projects during the 2012 financial year for a total investment commitment of US$7.5 billion. The board has recently placed a greater emphasis on controlling costs. In total, exchange rate volatility increased underlying earnings by $820 million as at 30 June. BHP already enjoys extensive product diversification. Earnings from the group's petroleum business, a business not enjoyed by major rivals, generated $6.3 billion, up 1% year on year. An assessment of more non-core products and operations continues to be made by management. The company is a potential beneficiary of any broad recovery of the global economy.
Negative Points: Management reported that iron ore production was affected during the period by a planned shutdown related to the Inner Harbour expansion project. Concerns surrounding the stability of the Eurozone and the decline in economic activity, accompanied by the managed slowdown of growth in China led to a period of significant market volatility for BHP and the wider mining industry. A major proportion of Australian iron ore production is exported to China. The IMF recently downgraded global economic growth expectations whilst the Chinese economy grew by 7.6% in Q2 2012, its slowest pace in three years. In August, the miner said it would abandon its $US30 billion expansion plan for the Olympic Dam copper/uranium project due to the slump in commodity prices. BHP will recognise impairment and other charges of $346 million before tax in respect of the Olympic Dam project. Cost pressures for both BHP and the wider industry continue to be seen. Higher fuel and energy prices (of which BHP Billiton is a net beneficiary), together with increased maintenance, labour and contractor expenses continue to provide cost pressures. Natural events such as the recent floods in Australia could again impact production. Currency movements provide potential headwinds. Attempts to substantially expand the company have failed, including a proposed merger with giant rival Rio Tinto. As such, the opportunity to remove significant costs has been lost. Costs in relation to each failed deal, including potential fees to investment bank advisers, have been suffered.
Production report: The world's largest miner said iron ore production for the full 2012/13 financial year was still expected to be 5% higher than the previous year, despite predictions that Chinese steel consumption will slow. BHP said its share of iron ore production slipped 3% from the previous quarter to 39.77 million tonnes, up 1% from the same period in the previous year. The company added its Queensland coal production increased by 20% in the three months to 30 September compared to the preceding three months, in part due to a reduction in industrial action. BHP's total metallurgical coal production in the quarter was down 4% on the previous corresponding period, but energy coal production was up 6%. Production of petroleum products was up 19% from the previous corresponding period, while copper and lead production fell, 24% and 6% respectively. Elsewhere, Zinc production was up 11%, uranium production was up 4%, and silver production saw no change year-on-year.
The Group's principal activities are exploring for, developing, producing and processing minerals, oil and gas. The Group's operations are divided into nine business divisions. Base Metals focuses on copper, silver, zinc, lead, uranium and copper by-products including gold. Petroleum focuses on hydrocarbons covering oil, gas and liquefied natural gas. Aluminium relates to bauxite, processing and marketing of aluminium and alumina. Iron Ore focuses its mining activities in the areas of Western Australia and Brazil. Energy Coal focuses on energy coal for use in electricity generation. Metallurgical Coal operates three underground coal mines in Australia. Manganese focuses on alloys, ores and metals. Stainless Steel focuses on nickel minerals which are used in the production of stainless steel. Diamond and Specialty Products operates a diamond mine in Canada and an integrated titanium smelter/mineral sand mines in South Africa. The group employs around 41,000 people working in over 100 operations in 25 countries.
BHP Billliton priced a five-year one billion Australian dollar note on Tuesday issued under its Australian Medium Term Note programme. According to a report in the Wall Street Journal, the world's largest miner by value sold the five-year bonds at 0.90 percentage points over the underlying swap rate, tighter than original guidance of 0.95 percentage points, demonstrating keen investor demand. BHP typically borrows in large volumes in the US and European debt markets. China's slowing economy is generally bad news for Australia's mining industry. With commodity prices easing attempts are being made to cut costs.
The Chief Executive of BHP Billiton, the dual-listed mining titan, has paid off a significant tax obligation resulting from an earlier long-term incentive bonus with the sale of both UK- and Australia-listed shares. Marius Kloppers, who has held the role of CEO since October 2007, has settled the bill by this week selling 59,913 London-listed shares at 1,913p each for a total of around £1.15m, alongside $3.37m-worth of ASX-listed shares. The sales enable Kloppers to satisfy the UK tax requirement for the vesting of 245,000 shares under a 2007 long-term incentive scheme earlier this week. The CEO also acquired 54,831 ordinary shares following the exercise of deferred shares under the 2010 Group Incentive Scheme.
Miner BHP Billiton is in talks with Petrobras to buy a stake in the Brazilian energy giant's Gulf of Mexico oil fields, according to an article in the Wall Street Journal published late Wednesday night. Petrobras, the Brazilian state-owned oil company, has reportedly valued its US offshore fields at approximately $8bn and enlisted Morgan Stanley to find a buyer for some of these assets. Reports in the Financial Times earlier in the week had suggested that Petrobras had narrowed the field to three possible bidders. BHP Billiton, a FTSE-100 constituent, was down slightly in early morning trade. However, this is maybe a delayed reaction to concerns over the effects of a slowdown in China. On Wednesday Sharecast reported that Bloomberg had cited ex-Morgan Stanley Chief Economist for Asia, Andy Xie, as forecasting that prices for iron ore - which reached a record $191.90 a metric ton on Feb. 16 last year - may plunge as low as $50 a tonne before the middle of next year. They haven't traded at that level since contract prices were set at $47 a ton in 2006. Morgan Stanley, while reiterating its 'overweight' recommendation has also lowered its price target for BHP Billiton from 2,180p to 2100p.
BHP Billiton: Morgan Stanley cuts target from 2,180p to 2,100p, overweight rating kept.
poster boy of the mining stocks.puting my money where my thoughts are.£20 by end of the month!
BHP Billiton: Nomura cuts target from 2,100p to 2,000p, buy rating kept.
While all diversified miners are exposed to bulk commodities, Nomura reckons that BHP will likely outperform its peers in the current market due to its "more diversified/defensive portfolio". As for the others, the broker said that: Rio Tinto may be the lowest cost iron ore producer but near-term earnings are leveraged and "not without risk"; higher costs/leverage assets leave Anglo American and ENRC as the least preferred stocks.
Mining giant BHP Billiton has signed an agreement to sell its Yeelirrie uranium deposit in Western Australia. Yeelirrie, located 630km north-east of Perth in the Northern Goldfields region, will be sold to uranium titan Cameco Corporation for $430m. "Cameco is one of the world's largest publicly listed uranium producers and is highly respected in the industry. We believe they are well placed to carry this project forward in a responsible manner," said BHP's Uranium President Dean Dalla Valle. Uranium was discovered at the Yeelirrie site in 1972 by Western Mining Corporation, which was acquired by BHP in 2005.
Postponement of Olympic Dam may make Oz Gov. think they were a little hasty in vetoing the potash deal.
Questor in the Telegraph goes in to bat, big time, for BHP Billiton. Yesterday the world’s biggest mining firm raised eyebrows after reporting a 26 per cent decline in pre-tax profits and cancelling a huge copper and uranium project, known as the Olympic Dam. Questor believes any pessimism is overdone, with the company still hugely profitable (operating margin at 39%) and the general trend in global urbanisation likely to drive profits for the foreseeable future. Trading at just 9.5 time 2013 earnings and yielding 4%, BHP is a buy.
With BHP cutting back on Dam project and now wanting to move into a potash project will it be Sirius minerals, largest find of pure potash in 30 years. very cheap buy too, would be a good move for BHP
The company said in its full-year results this morning: "BHP Billiton has an unrivalled portfolio of development options beyond those projects in execution and a significant number of these are embedded within our existing footprint. As our current expenditure commitments decline, future capital will be allocated to those options that maximise shareholder value, while also considering the balance between short and long-term returns."