Archive | BHP Billiton

BHP nets $650m on sale of Arizona mine – by Allan Seccombe (Business Day – April 30, 2013)

http://www.bdlive.co.za/

BHP Billiton, the world’s largest resources group, has sold a small, noncore copper mine in Arizona and an associated railway company for $650m, bringing its sale of assets in the past year to $5bn, BHP announced on Monday.

Analysts widely expect further asset sales from Australia-based BHP after Marius Kloppers stepped down as CEO. He was replaced by Andrew Mackenzie who has said he will focus on securing profit margins and cash flows by ensuring optimal performances from the group’s assets.

BHP sold Pinto Valley and the San Manuel Arizona Railroad Company to Canada’s Capstone Mining for $650m in cash in a deal subject to regulatory approval. The transaction should be concluded in the second half of this year.

“The sale of Pinto Valley is an excellent outcome for BHP Billiton shareholders,” Peter Beaven, president of BHP Billiton Copper, said yesterday. “It is consistent with our strategy and it takes the transaction value of divestments announced over the last 12 months to $5bn.”

Analysts said the price was well above what the market was expecting and that it was no surprise BHP was selling the business because of its small size and limited remaining life. Continue Reading →

Colombian miners hit out at Anglo American – by John Vidal (The Guardian – April 15, 2013)

http://www.guardian.co.uk/

The joint owners of the Cerrejón opencast mine will be accused at its annual meeting of jeopardising the health of 13,000 people

Communities from Colombia, Mongolia, South Africa and the US will demonstrate in London this week against some of the world’s largest mining companies, which they say are devastating the health of people, widely polluting the environment and forcing communities to move.

Anglo American, joint owners of the giant Cerrejón opencast coal mine in northern Colombia with BHP Billiton and Xstrata, will be accused at its annual meeting on Friday of jeopardising the health of the 13,000 people who live or work close to the operation that provides coal for power stations in Britain and Europe.

“We have had to suffer the impacts of opencast coal mining for over 25 years now. Our communities have been gradually and systematically asphyxiated by the contamination caused by coal mining, our societies [have been] fractured,” said Julio Gomez, president of Fecodemigua, the Federation of Communities Displaced by Mining in La Guajira, in London.

Around 500m of the total estimated 5bn tonnes of coal have been mined from Cerrejón since it opened in 1985, but the largest mine in Latin America plans to increase production by 25% in the next three years. Continue Reading →

Jansen project seeking green light from BHP board – by Pav Jordan (Globe and Mail – April 15, 2013)

Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Saskatchewan’s giant Jansen potash project seems just a signature away from final approval, but don’t hold your breath on a decision from the board of BHP Billiton Ltd.

The world’s largest miner is working on the production and service shafts, which are the longest lead items of potash-mine development. The $14-billion project still needs a green light on design engineering after deciding to double initial output on Jansen.

“We are finalizing this design engineering as part of the Jansen project feasibility study, which will be presented to the BHP Billiton board,” said company spokesman Ruban Yogarajah. “While this occurs, we will finish building the camp and continue shaft excavation and site preparation.”

Once built, Jansen is expected to be the world’s largest potash mine, dwarfing even those of BHP’s nearest rival, Potash Corp. of Saskatchewan Inc., which has mines nearby.

The mine, set in flat prairie lands about 150 kilometres southeast of Saskatoon, is a bet by BHP Billiton that potash, a crop nutrient, will become the world’s most important mined commodity as global food demand rises with new demand from emerging economies, where increasing affluence is changing eating habits. Continue Reading →

Billiton weighs mine expansion – by Scott Larson (Saskatoon Star Phoenix – April 11, 2013)

http://www.thestarphoenix.com/index.html

BHP Billiton still has plenty of work to do on its proposed $12-billion Jansen potash project before it can take the next step and submit the project to its board for final approval. The Australian mining giant has said it will hold off giving the green light to any major new projects, including Jansen, until at least June 30.

At a Bloomberg conference in Sydney on Wednesday, BHP’s chief financial officer, Graham Kerr, indicated the Jansen project could be presented to the board in the next financial year. That means the Jansen project could go before the board early as this July or as late as June 2014.

A recent story in the Sydney Morning Herald said Jansen is “likely to be among those considered first” once the freeze has been lifted.

BHP spokeswoman Bronwyn Wilkinson said there is still a substantial amount of work to be done and no time frame has been set as to when the Jansen project will be presented to the board for approval.

“The Jansen project is in feasibility study phase and remains subject to BHP Billiton board sanction,” Wilkinson said. BHP’s decision to increase Jansen’s first phase from its initial production of two million tonnes per annum (2mtpa) of potash to at least 4mtpa “requires extensive additional engineering design, particularly on the surface infrastructure.” Continue Reading →

Iron Ore Bear Market Looms as Supply Swamps Demand: Commodities – by Phoebe Sedgman (Bloomberg.com – April 4, 2013)

http://www.bloomberg.com/

Iron ore is heading toward its first surplus in at least a decade as output expands and Chinese steel mills, the biggest buyers, boost production at the slowest pace in five years.

Seaborne supply will advance 9.1 percent and demand 8.3 percent in 2013, led by exporters from Perth-based Fortescue Metals Group Ltd. (FMG) to Vale SA (VALE5), Morgan Stanley forecasts. A surplus will emerge in 2014 and keep widening until at least 2018, the bank predicts. Prices will slump as much as 34 percent to $90 a ton by the end of December, according to the median of seven analyst estimates compiled by Bloomberg.

Exports of the biggest seaborne cargo after oil are surging the most since 2010 after prices jumped as much as sevenfold in the past nine years. Goldman Sachs Group Inc. expects China’s imports to climb 4 percent in 2013, the least in three years. Its steel output will expand 2.6 percent as the nation’s economy grows at the second-slowest pace in the past decade, according to estimates from Morgan Stanley and economists surveyed by Bloomberg.

“We’ve got a steady lift of supply, mainly out of Australia,” said Tom Price, the Sydney-based analyst at UBS AG who has covered the market for about a decade. “We’ve observed for a couple of years now moderation in demand growth in China. A combination of those two is why we’re bearish.” Continue Reading →

Profits Drop at Big Five Miners – by Reuters (New York Times – February 12, 2013)

http://www.nytimes.com/

MELBOURNE — Global mining companies are set to unveil their biggest profit decreases in more than a decade and are clearing the decks with multibillion-dollar write-downs on poorly performing assets as they bring in new chief executives.

A sharp drop in commodity prices is likely to have driven down profits for the second half of last year by 40 percent to 50 percent at the top five mining companies when compared with the same period in 2011, forcing them to shelve expansion projects, slash costs and sell assets.

For the top three — BHP Billiton; Vale, based in Brazil; and Rio Tinto — iron ore earnings are likely to cushion losses in coal, aluminum and nickel for the period.

Chief executives are being punished for splurging in the boom years on projects and acquisitions instead of rewarding shareholders more generously, and investors are calling for Rio Tinto and BHP to rethink their policies.

One of the 10 largest shareholders in BHP and Rio Tinto’s Australian-traded stocks said his fund had been pressing both to pay out more of their profit to shareholders. The shareholder, Ross Barker, the managing director of Australian Foundation Investment, said that the companies were not paying higher dividends to shareholders so they could use the funds for investments that would deliver attractive returns. Continue Reading →

BHP Billiton faces corruption probe over Beijing Olympics – by Sonali Paul and Lucy Hornby (Reuters Canada – March 13, 2013)

http://ca.reuters.com/

MELBOURNE/BEIJING (Reuters) – The U.S. government is investigating top global miner BHP Billiton Ltd for possible corrupt practices, the company confirmed, after media reports said it was being probed for its sponsorship of the 2008 Beijing Olympics.

Australia’s Fairfax Media reported that the U.S. Department of Justice and the Australian Federal Police (AFP) were investigating allegations that BHP provided inducements, hospitality and gifts to Chinese and other foreign officials.

The U.S. Justice Department told Fairfax, in response to a freedom of information request, it was conducting “law enforcement proceedings” involving BHP, which supplied the materials for gold, silver and bronze medals used in Beijing. The Department of Justice declined to comment after U.S. office hours on Tuesday.

Australian police confirmed they had been working with foreign counterparts and local regulators on Australian aspects of the U.S. investigation, without providing further details.

BHP said it had been cooperating with “relevant authorities”, and in response to media queries said it believed it had complied with all applicable laws in regards to its Olympics sponsorship.

“BHP Billiton is fully committed to operating with integrity and the Group’s policies specifically prohibit engaging in bribery in all its forms,” BHP said in an emailed statement. Continue Reading →

BHP eyes $3.9bn nickel float – by Barry Fitzgerald (The Australian – February 26, 2013)

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

BHP Billiton has cranked up the potential for a $US4 billion ($3.89bn) spin-off of its ailing nickel division by making a big high-grade nickel discovery near its Perseverance mine at Leinster, 375km north of Kalgoorlie in Western Australia.

Industry circles have been buzzing about the new find, which BHP has called Venus after the brightest planet visible to the naked eye. It follows last year’s big nickel-copper Nova discovery in WA by Mark Creasy’s Sirius, the brightest star.

BHP yesterday would not be drawn on the scale of the Venus find, saying that the prospect was still in its early stages of delineation and development, so no guidance on reserves could be given.

However, the company also said that at this early stage, Venus had the potential “to reshape the profitably and direction of the Nickel West business”.

“Venus’s key attributes — mainly its high nickel grades and proximity to existing mining infrastructure — give it clear potential to materially increase Nickel West’s mining inventory and reshape the profitably and direction of the Nickel West business,” BHP told The Australian. Continue Reading →

Sliding doors at Rio reveal BHP’s future – by Robert Gottliebsen (Business Spectator – February 26, 2013)

http://www.businessspectator.com.au/

To understand what the Andrew Mackenzie era at BHP will mean for the Big Australian you have to delve deep into the folklore of Rio Tinto. The Rio Tinto folklore – which I am sure, is correct – never seemed that important until last week, when Andrew Mackenzie became BHP chief executive officer elect.

Yesterday, I showed how different Andrew Mackenzie is to the BHP CEO’s of the last half-century (Mackenzie’s clean break is bigger than you think, February 25) Now I want to tell the story from a Rio Tinto perspective because this remarkable Australian business tale starts with one of our most successful homegrown executives, Leigh Clifford, who joined Rio Tinto in Broken Hill in the early days of his career.

Rio Tinto has always looked at BHP’s ore bodies with envy. For example, BHP’s Mount Newman is a better iron ore body than Rio’s Hamersley. But Rio Tinto productivity and efficiency has always been ahead of BHP. Indeed, several decades ago it was Rio Tinto that tried to arrange a merger of the two iron ore operations because Rio believed it could transform BHP’s efficiency. And in those negotiations BHP was shocked at just how far ahead Rio Tinto was.

Its unfair and incorrect to attribute that productivity difference to one man, but a big contributor to moulding the high-productivity culture of Rio Tinto was Leigh Clifford who first transformed coal operations. Part of Clifford’s Rio Tinto strategy was to build much stronger bonds between workers and the company thus lessening the influence of unions. There is no doubt that Clifford’s role in the transformation of Rio Tinto was a big driver in him rising to become chief executive of Rio Tinto in London. Continue Reading →

[BHP-Billiton’s] Mackenzie’s clean break is bigger than you think – by Robert Gottliebsen (Business Spectator – February 25, 2013)

http://www.businessspectator.com.au/

I have personally known every BHP chief executive (they used different titles) for the last 50 years. During that time there has never been a BHP chief remotely like Andrew Mackenzie. The company is headed for a period unlike anything in the last 50 years of its history and I suspect this is a once-in-100-year change.

BHP shareholders, employees, and Australian governments need to understand what it means to have Australia’s largest company change direction and become more interested in productivity and shareholder distribution than expansion. The directional change is in part a response to what is happening in China (China will spoil Australia’s energy equation, February 22), the demands of shareholders, and the high cost of capital investment in Australia. The directional change by our largest miner will be followed by others, including Rio Tinto, and heralds a far less expansive Australian mining industry.

And remember the BHP board chose Andrew Mackenzie because they have embraced the plan he put to them as he pitched for the top job. During the last 50 years each BHP chief executive has aimed to leave his successor with more resources. Better productivity and shareholder distribution have always been in the agenda but have been swamped by expansion and other issues.

Andrew Mackenzie is aiming at allocating more money to dividends/capital returns plus lower borrowing so new investment projects will have to be very good. Given the high shareholder payouts and lower gearing agendas of BHP, the Big Australian might even find itself short of capital to do what it would have done without hesitation during most of the last 100 years. Continue Reading →

With blood in the water, mining’s great white shark is on the hunt – by Eric Reguly (Globe and Mail – February 23, 2013)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

ROME — Beheadings are putting the mining world through something akin to the French Revolution. Mining bosses who landed their jobs in the bubble era – 2006 and 2007 – or did their signature top-of-the-market deals in those years are being fired with alacrity. Or they are announcing their retirements, much to the delight of shareholders grown weary of the value destruction borne of stunningly overpriced takeovers and soaring costs.

The changing of the guard started in the autumn, when Cynthia Carroll said she would quit as chief executive officer of Anglo American. Not long after, BHP Billiton, the world’s top mining company, revealed that it would replace Marius Kloppers, the man who made a wrong bet on shale gas and botched the attempted takeover of Potash Corp. of Saskatchewan (the new CEO is Scotsman Andrew Mackenzie). Last month, it was Rio Tinto boss Tom Albanese’s turn. The biggest sinner of them all, he was knocked off for his boneheaded purchase of Montreal’s Alcan in 2007 for $37-billion (U.S.), most of which has now been written off.

Canadian mining bosses have been frog-marched to the guillotine too – Tye Burt of Kinross Gold and Aaron Regent of Barrick Gold were two of the late 2012 victims. A year earlier, Roger Agnelli was pushed out of Vale, the Brazilian company that paid an eye-watering price for Canada’s Inco.

The last man standing is Ivan Glasenberg, the Glencore International CEO who is about to become the head of the mining and trading colossus to be formed by the merger of Glencore and Xstrata, the Anglo-Swiss miner that owns Falconbridge. Continue Reading →

BHP Billiton appoints new CEO as miner suffers worst profit drop in decade – by Sonali Paul (Reuters/National Post – February 20, 2013)

The National Post is Canada’s second largest national paper.

MELBOURNE — BHP Billiton Ltd appointed the head of its non-ferrous business as its CEO to replace Marius Kloppers, the fourth global miner this year to change its top brass as the industry enters a new era of austerity.

Miners are now focusing on squeezing the most out of their best assets after coming under pressure from investors for splashing out on expensive projects and acquisitions and allowing costs to spiral out of control in the boom years.

BHPís appointment of Andrew Mackenzie, 56, as its CEO is a sign that miners are turning to men with strong operational credentials to focus on capital discipline, rather than deal makers, as commodity prices wane. Rival Rio Tinto appointed former iron ore chief Sam Walsh as its CEO last month.

The era where these big mining companies such as BHP go out and engage in these expensive corporate deals is over. Mackenzie and Walsh prove that, said Gavin Wendt, an analyst for MineLife in Australia. They can no longer go out and spend and spend as their investors stand on the side and watch in bemusement. Mackenzie, wooed by Kloppers from Rio Tinto in 2007, will move into the top job in May. Continue Reading →

BHP’s Andrew Mackenzie: A new chief, a new direction – by Paul Waldie (Globe and Mail – February 20, 2013)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

LONDON — The new chief executive of mining giant BHP Billiton PLC says mergers and acquisitions will not be a major part of his strategy.

Andrew Mackenzie, who is taking over as chief executive officer from Marius Kloppers, said during a media conference call Wednesday that his main priority will be to “run our very impressive ore bodies extremely well.” He added that while BHP won’t completely rule out mergers, they are “not central to my strategy.” Instead, he plans to concentrate on cutting costs and improving the company’s “capital discipline.”

BHP announced late Tuesday that Mr. Kloppers will resign in May after a near 20-year career at the miner including nearly six as CEO. He had come under pressure recently for sharp writedowns of some assets and a couple of failed takeovers including a $40-billion (U.S.) bid for Potash Corp. of Saskatchewan Inc. in 2010 which was thwarted by the Canadian government.

Mr. Kloppers, 50, said during the conference call Wednesday that the decision to leave was difficult but he that he felt “the time is right to pass the baton to Andrew.” He added that he was leaving with pride at what he had accomplished at BHP. And he said he has no plans after leaving BHP beyond returning to his native South Africa for a while. Continue Reading →