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BHP-Vale JV Excused From Paying $6.3 Billion Legal Guarantee – by R.T. Watson (Bloomberg News – July 19, 2017)

https://www.bloombergquint.com/

(Bloomberg) — A Brazilian judge denied a request by prosecutors for companies and individuals facing criminal charges related to a dam spill to pay financial guarantees, according to court documents obtained by Bloomberg.

The stalled Samarco Mineracao SA joint venture and its owners BHP Billiton Ltd. and Vale SA won’t have to pay a 20 billion-real ($6.3 billion) guarantee while the case is being tried and final damages calculated, the documents show. The judge also ruled that the individuals aren’t required to pay any financial guarantees or be subjected to travel restrictions such as passport seizure.

Federal prosecutors filed criminal charges including homicide against 21 people linked to the operators and owners of the iron-ore mine, while also accusing defendants of a series of environmental crimes. A November 2015 tailings dam collapse killed as many as 19 people and polluted waterways in two states. Among the accused individuals are Vale’s head of iron ore, Peter Poppinga, and Samarco chief executive officer at the time of the incident, Ricardo Vescovi. The case could go before a jury.

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Divisive $13 Billion Potash Plan to Test BHP’s New Chairman – by David Stringer (Bloomberg News – July 17, 2017)

https://www.bloomberg.com/

BHP Billiton Ltd.’s plan to enter the potash market with a contentious $13 billion project in Canada is adding to challenges facing the incoming chairman of the world biggest mining company.

Ken MacKenzie, a 53-year-old board member who takes up the role in September, currently is on a global tour to meet investors in the wake of an activist campaign in recent months spearheaded by Elliott Management Corp. Issues of concern for some shareholders include the producer’s U.S. onshore oil and gas assets and its plans to accelerate the Jansen potash venture.

Proceeding with Jansen risks a “severe strategic misstep,” according to Sanford C. Bernstein Ltd. analyst Paul Gait, as the new supply would risk depressing prices by delaying to about 2036 the ability of the potash market to work through overcapacity. Paul Singer’s Elliott went public in April with a campaign seeking asset sales and a corporate overhaul, claiming management decisions have eroded as much as $40 billion in value.

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BHP’s New Chairman Expected to Drive a ‘Radical Shift’ – by Jasmine Ng (Bloomberg News – July 5, 2017)

https://www.bloomberg.com/

BHP Billiton Ltd.’s new chairman is about to shake things up at the world’s largest mining company, according to Sanford C. Bernstein Ltd., which says that Ken MacKenzie will probably undertake a full-scale review of assets and strategy, and may demerge the petroleum business.

“Despite management’s reluctance to change at this stage, we believe that BHP is about to experience a radical shift in strategy, driven by the arrival, effective Sept. 1, of the new chairman,” analysts including Paul Gait said in a note.

MacKenzie used to run a packaging business, and his “detachment from the mining sector makes him, we believe, inevitably far more objective on the best direction BHP should take from now on.” BHP has been the target of an activist investor campaign in recent months spearheaded by Elliott Management Corp., which has rounded on management decisions that the fund claims have destroyed about $40 billion in value.

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Court gives BHP, Vale until October 30 to settle $47 billion Samarco claim (Reuters U.S. – June 30, 2017)

https://www.reuters.com/

BHP Billiton (BHP.AX) (BLT.L) and Vale (VALE5.SA) have won a four-month extension from a Brazilian court to negotiate a settlement to a $47 billion claim stemming from the Samarco mine disaster in 2015, BHP said on Friday.

Brazilian federal prosecutors in May last year served the joint partners in the Samarco iron ore mine with a 155 billion Brazilian real ($47 billion) claim to pay for the social, environmental and economic costs of cleaning up the country’s worst environmental disaster.

“The Court has extended the final date for negotiation of a settlement until 30 October 2017,” BHP said in a statement. Nineteen people died and nearby towns were inundated with flood waters after a dam designed to hold back mine waste burst on Nov. 5, 2015.

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BHP says work on Jansen mine moving ahead – by Ashley Robinson (Regina Leader-Post – June 28, 2017)

http://leaderpost.com/

Giles Hellyer is optimistic about the multi-billion-dollar Jansen potash mine project. The BHP president, Potash Canada, presented an update Wednesday during a Regina & District Chamber of Commerce luncheon.

Located about 140 kilometres east of Saskatoon, the massive Jansen project has experienced significant delays, but Hellyer stressed during the luncheon that plans and work on the mine are progressing.

Last month, BHP CEO Andrew Mackenzie told a conference in Barcelona that the mine’s first phase could go to the Melbourne-based company’s board of directors for approval next summer and be operational in 2023.

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BHP mine investment ‘may restore trust’ – by Paul Garvey (The Australian – June 27, 2017)

http://www.theaustralian.com.au/

BHP’s looming $US3.2 billion ($4.2bn) investment in the new South Flank iron ore mine will not only maintain the mining giant’s Pilbara output but could strengthen community trust that has come under strain in recent years, according to Mike Henry, BHP’s president of Australian ­operations.

BHP yesterday announced it had committed $US184 million to early construction works at South Flank deposit, which is expected to replace the 80 million tonne a year Yandi mine when it runs out of ore next decade.

The mining giant also revealed that the South Flank project was expected to cost between $US30 and $US40 a tonne of annual production capacity, which would make it the single biggest new mining project in Australia since the construction of Gina Rinehart’s Roy Hill mine.

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No more quiet chats? Australia becomes new frontier for shareholder disruption – Jamie Freed and Maiya Keidan (Sydney Morning Post – June 22, 2017)

http://www.smh.com.au/

As BHP Billiton fends off the attention of Elliott Management, activist funds are targeting other Australian firms, shaking up a corporate culture that has long favoured quiet chats over splashy headlines.

Seeking new, less crowded markets, international activist investors are using Australia’s shareholder-friendly laws to pressure corporate boards criticised as clubby and conservative in an effort to improve returns.

“Whereas before it was quite normal for companies to address any potential shareholder activism in Australia behind closed doors, only now is there a real appetite to go public and to take the message direct to shareholders,” said Michael Chandler, governance director at shareholder engagement firm Global Proxy Solicitation.

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BHP’s new chairman has choice between exciting and boring – by Clyde Russell (Reuters U.S. – June 19, 2017)

https://www.reuters.com/

LAUNCESTON, AUSTRALIA – There has been no shortage of advice doled out to incoming BHP Billiton chairman Ken MacKenzie on how to boost the world’s largest mining company, but ultimately his role comes down to a fairly straightforward choice.

Does BHP want to be a cutting edge mining company always on the prowl for the next big opportunity, or does it want to be a cautious, dividend-focused cash generator, something akin to being the telecoms utility of the mining world?

If there is anything that can be learned from the performance of BHP, and indeed most of its global mining rivals, in the past decade, it’s that escaping the ups and downs of the commodity cycle is extremely difficult for a miner.

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BHP’s Tyro Chairman Seen Driving Deeper Shakeup at Biggest Miner – by David Stringer (Bloomberg News – June 16, 2017)

https://www.bloomberg.com/

BHP Billiton Ltd.’s decision to look past boardroom veterans and name its youngest director Ken MacKenzie as chairman is raising expectations of further changes in leadership and its portfolio as the mining giant grapples with smoldering shareholder unrest.

While BHP’s most restive investor Elliott Management Corp. welcomed the appointment Friday, billionaire Paul Singer’s hedge fund also called on MacKenzie, 53, to address the No. 1 miner’s performance, review the executive team and nominate new directors. Under the new chairman, there may be management changes and there’s increased potential for the sale of U.S. shale assets, Citigroup Inc. said in a note.

MacKenzie plans to meet investors over the coming weeks before taking up his post from Sept. 1, and aims to “understand their perspectives,” he said in a statement. His plan will be seen as an “olive branch” after more than two months of public skirmishes over strategy and spending between BHP and critics including Elliott, according to Shaw and Partners Ltd. BHP declined to confirm whether MacKenzie will meet with Elliott.

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Robot Ghost Ships to Extend Miner’s Technology Drive to Seas – by David Stringer (Bloomberg News – June 6, 2017)

https://www.bloomberg.com/

BHP Billiton Ltd., the world’s biggest mining company, is studying the introduction of giant, automated cargo ships to carry everything from iron ore to coal as part of a strategic shift that may disrupt the $334 billion global shipping industry.

“Safe and efficient autonomous vessels carrying BHP cargo, powered by BHP gas, is our vision for the future of dry bulk shipping,” Vice President, Freight Rashpal Bhatti, wrote in a posting on its website. The company, also one of the world’s largest dry bulk charterers, is seeking partners to work on technological changes in the sector, he said.

BHP, which charters about 1,500 voyages a year for around a quarter of a billion metric tons of iron ore, copper and coal, wants to deploy the technology within a decade, according to Bhatti. For the biggest miners, a move to crewless ships could deliver new savings in the $86 billion a year seaborne iron ore market, mirroring the shift to autonomous trucks to trains that allow fewer staff to remotely operate or monitor multiple vehicles.

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BHP aims to grow potash mining into a core business – by Kaori Takahashi (Nikkei Asian Review – June 5, 2017)

http://asia.nikkei.com/

Resource giant weighs sell-off of US shale gas assets in restructuring drive

SYDNEY — BHP Billiton is increasing its investment in potash mining and seeking to divest its U.S. shale gas assets. Andrew Mackenzie, CEO of the world’s largest miner, told The Nikkei that “under some circumstances, we might start to grow potash to the size of our iron ore business today.”

Mackenzie said BHP will continue its restructuring effort. It is looking for an opportunity to sell its shale gas business, which has seen its profitability deteriorate, to focus more on potash, potentially bringing it into line with the company’s dominant iron ore business which reaps over $9 billion a year.

“It’s taken us 50 years to create today’s iron ore business. It will be another 50 years to create a potash equivalent. So you have to start somewhere,” Mackenzie said.

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Iron ore market can absorb supply loss from BHP fire: traders – by James Regan (Reuters U.S. – June 1, 2017)

https://www.reuters.com/

SYDNEY – A well-supplied global iron ore market will easily absorb lost production due to a fire at BHP’s big Mt Whaleback iron ore mine in Australia, traders in the commodity said on Thursday.

A fire earlier on Thursday broke out at the mine, the largest of seven operated by BHP in the Pilbara iron ore belt of Western Australia state. BHP said all staff were safe but that operations had been suspended as an investigation got underway.

Images in local media showed fire and smoke billowing out of the processing facilities at the mine. “All personnel at site have been accounted for and we are working to ensure the site is safe,” a company spokeswoman said.

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BHP and Rio face fresh tax threat in WA – by Tess Ingram and Peter Ker (Australian Financial Review – May 28, 2017)

http://www.afr.com/

Iron ore giants BHP Billiton and Rio Tinto are facing a fresh tax grab in Western Australia just months after seeing off the WA Nationals’ concerted push to slap the miners with a tax hike that would have cost them about $3 billion a year.

West Australian Premier Mark McGowan confirmed on Sunday the new Labor state government would ask BHP and Rio to “buy out” the 25¢ lease rental fee they pay on every tonne of iron ore produced to provide a potentially multibillion-dollar injection to government coffers.

At current production rates BHP and Rio would collectively owe WA about $150 million a year in lease rental fees, and while there was no clarity on the number of years’ fees WA wants paid up front, the bill would rise to $4.5 billion if the two miners paid 30 years’ worth of fees in a lump sum.

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BHP talks up Saskatchewan potash project – by Matt Chambers (The Australian – May 23, 2017)

http://www.theaustralian.com.au/

BHP’s board could have the most expensive ­single development approval ­decision in the miner’s history in front of it next financial year, in the form of a $US4.7 billion ($6.3bn) investment in the Jansen potash project in Saskatchewan.

Lost in the ramp-up of activist fund Elliott Management’s hostilities last week was the revelation that the miner is nearly ready to give approval to the first production stage of the Jansen project, where it has approved $US3.8bn to sink 1km-deep shafts to get to the big potash deposit.

The enthusiastic BHP mood around potash will create trepidation among some investors that the Elliott push to create value through an oil and gas restructure and share unification is accelerating potash development, while Canadian analysts have queried whether the global potash market can support it.

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South32 Needs a Spouse in a Hurry: Merge With Teck Resources – by David Fickling (Bloomberg News – May 19, 2017)

https://www.bloombergquint.com/

(Bloomberg Gadfly) — For all the debate about activist investor Elliott Management Corp.’s assault on the mining company now rebranding itself as BHP, there’s another question investors should be pondering: What’s going to become of Billiton?

South32 Ltd., the company spun out of BHP Billiton Ltd. in 2015 and consisting largely of sub-scale assets brought into the business in its 2001 merger with Billiton Plc, has put in a creditable performance of late.

As Elliott would be happy to point out, South32’s shares have risen about 28 percent since the split, compared with a 21 percent drop at its larger sibling. After two years of losses, analysts expect $1.24 billion of net income in the year through June. In a mining industry still groaning under the weight of its debts, South32’s $859 million net cash pile is the biggest after Coal India Ltd. and Hindustan Zinc Ltd.

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