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At BHP, the stars align for second run at Potash Corp – by Boyd Erman (Globe and Mail – April 15, 2014)

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.

A window is opening for BHP Billiton Ltd. to once again try a takeover of Potash Corp. of Saskatchewan.

Speculation is intense in the fertilizer industry that BHP may mount another campaign to win over Saskatoon-based Potash Corp. after being shot down in 2010. It failed the federal government’s murky “net benefit test” after a strong push from a Saskatchewan government that opposed the transaction.

Bankers, executives and advisers on the political side agree that BHP would be crazy not to look again. To be clear, there is no sign that any potential deal is under way. But there are numerous reasons that people are talking about the possibility.

The numbers work. The personalities are closer to working. Even the politics are not insurmountable because the landscape has shifted, especially in Saskatchewan. Finally, what was true in 2010 remains true now: Owning Potash Corp. is the best way to get into the potash business.

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COLUMN-BHP’s “unloved” assets may be better long-term bet – by Clyde Russell (Reuters U.K. – April 14, 2014)

http://uk.reuters.com/

LAUNCESTON, Australia, April 14 (Reuters) – “Unloved” was a word that popped up several times in relation to BHP Billiton’s mooted plans to spin-off its non-core aluminium, nickel and manganese businesses.

It’s worth looking at the language used to describe and frame corporate plans as this is more often revealing that the bland statements companies tend to issue.

BHP Billiton didn’t use the word “unloved” itself, that was the description applied by news outlets, among them Reuters, the Sydney Morning Herald and the Wall Street Journal.

What BHP Chief Executive Andrew Mackenzie did say was the world’s largest mining company was looking at a range of options in the “next phase of simplification,” but would only pursue those that enhanced shareholder value.

BHP has identified four key pillars of its business – iron ore, copper, coal and petroleum – with potash a potential fifth. This leaves the so-called unloved assets as aluminium, alumina, bauxite, nickel and manganese.

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BHP polishes up nickel unit as demerger talk swirls – by James Regan (Reuters India – April 11, 2014)

http://in.reuters.com/

SYDNEY, April 11 (Reuters) – Breakthroughs in the way BHP Billiton processes nickel ores could help the world’s biggest miner find a buyer for its ailing Nickel West division in Australia.

Nickel West is among businesses that also include aluminium and manganese which BHP has grouped into a single division set aside in 2012 for underperforming assets deemed non-core to its portfolio. BHP has said it is actively studying the “next phase of simplification” of the company but declined to comment on media reports that senior executives favoured a demerger.

Chief Executive Andrew Mackenzie has said BHP will focus on its large iron ore, copper, coal and petroleum businesses, while selling off smaller, less profitable operations. Macquarie Bank last month in a research note put a value of $4.6 billion on the nickel assets.

Improvements in the way BHP mines nickel together with better market dynamics and exploration successes could save Nickel West from closure.

A programme at Nickel West to extract full value from ore that would otherwise be uneconomic to treat due to high contents of talc is opening up more of BHP’s rich Mount Keith and Yakabindie deposits in Western Australia for mining, enhancing the potential appeal to outside investors.

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UPDATE 1-BHP Billiton weighs spin-off of unloved assets – by Sonali Paul (Reuters U.K. – April 1, 2014)

http://uk.reuters.com/

MELBOURNE, April 1 (Reuters) – BHP Billiton is weighing a range of options to simplify its portfolio of assets, including a possible spin-off of unwanted businesses such as aluminium and nickel into a separate company, the top global miner said on Tuesday.

“We continue to actively study the next phase of simplification, including structural options, but will only pursue options that maximise value for BHP Billiton shareholders,” the company said in a statement.

Chief Executive Andrew Mackenzie has said over the past year that the company plans to focus on its large iron ore, copper, coal and petroleum businesses, while selling off smaller, less profitable operations.

The company’s statement on Tuesday came shortly after The Australian Financial Review newspaper reported that BHP was considering spinning off non-core assets into a separate company, offering shares to existing shareholders.

BHP shares rose as much as 2.2 percent to a three-week high after the report. They last traded up 1.7 percent at A$37.10 in a weaker broader market. Spinning off a company with non-core assets would allow BHP to pare down at a time when it may be difficult to find buyers willing to pay a good price. It could also help flush out a buyer.

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China’s steel meltdown will ripple around the world – by Carl Mortished (Globe and Mail – March 27, 2014)

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 — There’s too much mining, and too much iron ore. Overproduction will take the price of steel’s raw material down by almost a third over the next few years, says Australia’s official forecaster. A supply glut could be just part of the problem, because a swathe of Chinese steel makers are burdened with too much debt – and Beijing is not keen on bailouts.

Australia’s iron triumvirate – Rio Tinto Group, BHP Billiton Ltd. and Fortescue Metals Group Ltd. – are ramping up production, and chasing market share at the expense of prices. The frenzied digging means that the country’s exports of ore are expected to rise by almost a fifth to 680 million tonnes this year.

Australia’s Bureau of Resource and Energy Economics is predicting that by 2019, the iron ore price will fall from last year’s average of $126 (U.S.) per tonne to $87.

The price has already declined by a fifth since the beginning of this year, moving close to $100 per tonne, amid concerns that China’s export engine is slowing.

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BHP workers brace for uncertainty – by Neale Prior (The West Australian – March 10, 2014)

http://au.news.yahoo.com/thewest/

Nickel West workers are bracing for a year of uncertainty as mining giant BHP Billiton embarks on a formal campaign to sell the underperforming mining and processing wing.

After slashing the book value of the operation by $US1.6 billion, BHP is believed to have appointed international investment bank Goldman Sachs to find a buyer.

The Goldman Sachs appointment leaked over the weekend via The Australian Financial Review after speculation building out of London last week that BHP was offloading its WA poor relation.

The nickel arm has been starved of capital and sits outside BHP’s favoured areas of iron ore, coal, petroleum and copper.

The sale push puts the jobs of up to 2000 employees and contractors in play and fans fears that BHP could close all or part of the division if it cannot reach acceptable sales terms.

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BHP Billiton CEO Andrew Mackenzie: Economy is sound – by Peter Ker (The Age – February 24, 2014)

http://www.theage.com.au/

BHP Billiton boss Andrew Mackenzie says he is optimistic about Australia’s economic prospects, despite the departure of the car makers and last week’s closure of the Alcoa smelter at Point Henry.

But Mr Mackenzie told Channel Nine’s Financial Review Sunday program the swath of job losses in manufacturing highlighted the importance of the nation uniting behind a single productivity agenda.

Mr Mackenzie has been particularly upbeat about the future of the Australian economy since taking over as chief executive in May, and his mantra that Australia still has ”everything to play for” has often been at odds with the gloomy prognoses of federal governments.

Mr Mackenzie has regularly urged Australia to help itself by reforming industrial relations, taxes and its productivity performance, and said the high-profile corporate closures were a reminder of that.

”To be pro-Australia for a moment I wish they hadn’t happened … but I have a global perspective, I see what happens elsewhere in the world and I still think Australia has an awful lot going for it,” he said.

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COLUMN-Identical twins BHP and Rio start to differ – by Clyde Russell (Reuters India – February 18, 2014)

http://in.reuters.com/

Feb 18 (Reuters) – For the past 18 months BHP Billiton and Rio Tinto have appeared like identical twins, singing the same tune on cutting back spending, controlling costs and returning more to shareholders.

The latest financial results show the world’s two biggest diversified miners are finally hitting the right notes with investors, but are diverging in style.

BHP Billiton on Tuesday posted a 31 percent rise in first-half profit to $7.76 billion, beating the median analysts’ forecast of $6.93 billion. This was achieved on the back of annualised cost savings of $4.9 billion, lower capital expenditure and higher profits from expanding iron ore output.

It was a similar story for Rio Tinto, which on Feb. 13 reported a 45 percent jump in second-half profit to $5.99 billion, exceeding the median forecast of $5.49 billion.

As with BHP, much of the boost came from cuts to capex and operating costs, with the standout performer being iron ore, which provides about 90 percent of the company’s profits.

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BHP mulled leaving London and dropping dual listing – by James Chessell (Sydney Morning Herald – February 17, 2014)

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

Has BHP Billiton been reconsidering its dual listing on the Australian and London stock exchanges?

The official line from the world’s largest diversified resources is that no serious work has been done on collapsing the dual-listed company structure. A BHP spokewoman said: “We think this structure has worked and continues to serve shareholders well”.

Yet there are those who remain convinced that in the second half of 2013 a team was assembled to look simplifying parts of the vast $121 billion business, including the dual listings.

The project was known as “unification”, according to multiple sources, and later focused on simplifying internal processes, financial management and legal entity structures. It had the blessing of chief executive Andrew Mackenzie, who assumed the top job in May and will hand down what is expected to be a $US6.9 billion interim profit on Tuesday.

Everyone agrees that it was eventually decided that it would be too difficult to collapse the dual-listed structure.

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Record iron-ore and coal production at BHP Billiton’s operations – by Staff (Business Day Live – January 22, 2014)

http://www.bdlive.co.za/ [South Africa]

GLOBAL resources group BHP Billiton has reported a strong operational performance for the six months ended December 2013, with production records achieved across 10 operations and several commodities.

Releasing its operational update for the second half of the year on Wednesday, the group said it had maintained strong momentum in the period. Full-year production guidance was retained for its petroleum, copper, iron-ore and coal businesses.

Iron-ore production was up 19% in the half-year to a record 98-million tonnes, while metallurgical coal production rose 22% to a record 22-million tonnes. Alumina production improved 8% to a record 2.6-million tonnes.

“A strong operating performance across our diversified portfolio in the December 2013 half-year delivered a 10% increase in production, and volumes are expected to grow 16% over the two years to the end of the 2015 financial year,” CEO Andrew Mackenzie said.

“Iron ore and metallurgical coal were particularly strong and are very well positioned to achieve guidance, notwithstanding the general uncertainty that exists as we enter the wet season,” he added.

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COLUMN-Investors may be buying BHP, Rio cost-cutting story – by Clyde Russell (Reuters India – December 11, 2013)

http://in.reuters.com/

Dec 11 (Reuters) – It’s taken some time but there are signs that the cost-cutting efforts by major commodity producers such as BHP Billiton and Rio Tinto are starting to convince investors.

“My principle aim is to create value and free cash flow,” Andrew Mackenzie, the chief executive of BHP , said at an investor briefing on Dec. 10.

To this end he confirmed that capital expenditure at the world’s largest mining company has been too high in recent years, with the $23.3 billion spent last year poised to shrink by 25 percent in the 2013 fiscal year, and again in subsequent years. The presentation slides anticipate capital expenditure for major projects being a quarter of the 2013 level by 2016.

Rio Tinto , the world’s second-biggest miner, is also slashing spending, announcing plans to halve capital expenditure and slash debt.

Rio Tinto said on Dec. 3 that it will cut spending to $11 billion in 2014 from just under $14 billion this year, and sees capital spending at $8 billion in 2015, which would be less than half what it was in 2012.

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BHP talks up Canada potash prospects – by Peter Ker (Sydney Morning Herald – November 22, 2013)

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

BHP Billiton says it has been encouraged by recent work that suggests its push into the Canadian potash sector will be supported by further resources of the commodity close to its proposed Jansen mine.

BHP confirmed a gradual push into the potash sector in August, when it approved $US2.6 billion worth of spending on Jansen over five years, and since then the miner has described potash as having the potential to become a ”pillar” of the company alongside iron ore, coal, petroleum and copper.

Speaking at the company’s annual meeting in Perth on Thursday, BHP Billiton boss Andrew Mackenzie said exploration work had suggested that Jansen could be just the start of a ”basin-wide play” for BHP in the Canadian state of Saskatchewan.
”On its own Jansen is probably not a big enough resource for us to be a business that would rival our other four pillars, we need several Jansens,” he said,

”The news is good, we feel very confident that we now have many more Jansens that future generations of management can consider to think about this as a basin-wide play.”

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BHP Billiton defends its track record on assisting black mines – by Brendan Ryan (Business Day – October 28, 2013)

http://www.bdlive.co.za/ [South Africa]

IN AN unusually public and hard-hitting statement, mining resources giant BHP Billiton has disputed claims by Transnet CEO Brian Molefe that the miner is not doing enough to promote black economic empowerment (BEE) in South Africa’s coal-mining export industry.

BHP Billiton described Mr Molefe’s statements as being “far from the truth” on Friday and criticised Transnet Freight Rail’s underperformance in matching its capacity to rail coal to Richards Bay Coal Terminal’s (RBCT’s) expanded capacity.

Previously, individual coal exporters have avoided criticising Transnet “on the record” apparently because of fears that the utility, which runs the all-important coal line from Emalahleni to Richards Bay, would penalise them in terms of availability of trains required to haul coal to RBCT for export.

On the rare occasions when the industry has criticised Transnet, it has come from RBCT, whose members include the country’s most important coal-mining and exporting companies.

Responding to questions last week after his presentation of Transnet’s interim results for the six months to end-September, Mr Molefe accused RBCT members of denying access to the export market to small black-owned coal companies.

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BHP’s outlook optimistic, AGM hears – by Matt Chambers (The Australian – October 24, 2013)

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

BHP Billiton says the global economy is picking up, with positive signs in the US and Japan, boding well for plans to drive an 8 per cent increase in overall production over the next two years and for shareholders hoping for capital returns.

In the company’s annual general meeting in London tonight, BHP chairman Jac Nasser and recently installed chief executive Andrew Mackenzie gave an optimistic outlook for global growth and the demand for the iron ore, petroleum, copper and coal that BHP produces.

“The (2012-13) period was challenging, with slowing global growth and weaker commodity markets,” Mr Mackenzie told the first BHP annual general meeting he has fronted as chief executive since taking over from Marius Kloppers this year.

“However, we are already seeing signs of recovery in the global economy.” Mr Mackenzie said a productivity drive pursued by the miner in the wake of shareholder calls for restraint as Chinese growth slowed last year was paying off.

BHP was now confident of boosting production by 8 per cent, based on converting all its production to copper equivalent, over the next two years, he said.

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COLUMN-BHP, Rio Tinto show commodity game has changed – by Clyde Russell (Reuters U.S. – October 23, 2013)

 http://www.reuters.com/

Clyde Russell is a Reuters market analyst. The views expressed are his own.

LAUNCESTON, Australia, Oct 23 (Reuters) – The latest production reports by Anglo-Australian mining giants BHP Billiton and Rio Tinto show just how much the commodity market has changed in the past year.

BHP and Rio’s quarterly statements underline that mining is now a game of producing the highest volumes at the lowest costs, while at the same time scaling back on spending.

This seems like a logical response to concerns over slowing demand growth from top consumer China, whose appetite for commodities drove a decade-long boom in developing projects to boost supply.

The jury is still out on whether the major resource companies stopped spending in time to avoid a major bust in commodity prices, or whether new supply still in the pipeline will deliver a crashing end to the China-led boom. Certainly both BHP and Rio made much of their efforts to boost volumes at lower costs, while scaling back capital expenditure.

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