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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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BHP Billiton Half-Year Profits Rise, Led by Iron Ore – by Rhiannon Hoyle (Wall Street Journal – February 17, 2014)

http://online.wsj.com/home-page

SYDNEY–BHP Billiton Ltd. (BHP) said Tuesday its first-half profit rose, as it cut spending and squeezed more from assets including its vast Australian iron ore pits to offset a decline in global commodity prices.

BHP-the world’s largest mining company by output-reported a net profit of US$8.11 billion in the six months through Dec. 31, up from a profit of US$4.43 billion in the year earlier period. The result beat an average US$7.04 billion of seven analysts’ forecasts compiled by The Wall Street Journal.

Melbourne-based BHP increased its interim dividend by 3.5% to 59 U.S. cents a share, reflecting Chief Executive Andrew Mackenzie’s strategy of focusing more on boosting returns for shareholders and less on costly acquisitions or funding major new projects.

Miners like BHP and Rio Tinto PLC (RIO), which invested billions of dollars in new projects over the past decade as an Asia-led boom in demand for raw materials like coal and iron ore, are being forced to overhaul their strategies as prices of those commodities fall. An economic slowdown in China-the world’s biggest buyer of commodities-and several big new mines starting up have left the world awash with too much supply.

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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 Billiton CEO Looks to Cut Annual Spend Below US$15 Bln – by Rhiannon Hoyle (Wall Street Journal – December 10, 2013)

http://online.wsj.com/home-page

SYDNEY–BHP Billiton Ltd. (BHP) signaled it would try to limit annual spending to US$15 billion, highlighting a newly found commitment to thrift in the face of weaker commodity prices.

For the world’s largest mining company, this expenditure goal represents a deep cut on the US$21.7 billion it spent last financial year on projects from huge iron-ore deposits in Australia’s arid Pilbara region to deep-sea oil-and-gas fields in the U.S. Gulf of Mexico.

Melbourne-based BHP isn’t alone in tapering spending plans. Companies across the resources spectrum have been tightening the purse strings amid a sharp fall in the value of commodities like coal and gold as China’s economy cools. Rio Tinto PLC (RIO) recently unveiled plans for a marked cut in spending in the years’ ahead as it focuses on reducing a hefty debt pile accumulated in a massive expansion of its own operations.

BHP has already made swingeing cuts to expenditure in the current fiscal period to June 30, 2014, and is likely to report further reductions in subsequent years as it aims to be “more clever with capital,” Chief Executive Andrew Mackenzie told an investor briefing in Houston.

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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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BHP: Commodities demand to rise 75% over 15 years – by Alex MacDonald (Wall Street Journal – October 24, 2013)

http://www.marketwatch.com/

LONDON–Anglo-Australian mining firm BHP Billiton Ltd BHP +0.63% expects global commodities demand to grow 75% over the next 15 years driven in part by continued urbanization in emerging economies, the company’s chief executive said Thursday.

Speaking at the company’s annual general meeting in London, Andrew MacKenzie told shareholders “we are already seeing signs of recovery in the global economy” after a challenging year due to slower global economic growth and weaker commodity prices.

At the same meeting, Chairman Jac Nasser said the company is seeing moderate growth rates in the U.S. economy and a stronger U.S. housing sector and stock market. BHP expects continued recovery in the U.S. despite risk from the unwinding of the Federal Reserve’s monetary easing policy.

In Europe, conditions remain challenging although more stable with uncertainty likely to continue in the near term, Mr. Nasser said.

In China, the world’s largest consumer of many commodities, economic growth is expected to rise at a rate of 7% next year, Mr. Nasser said. This is slightly lower than the 7.8% annualized growth rate recorded in the third quarter of this year, but Mr. Nasser said he still expects the absolute demand levels for commodities to continue to rise as people continue to migrate from the countryside to cities.

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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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BHP raises iron ore target as Australian expansions accelerate – by James Regan (Reuters India – October 22, 2013)

http://in.reuters.com/

SYDNEY – (Reuters) – Global miner BHP Billiton (BHP.AX) upgraded its iron ore production target for fiscal 2014 while petroleum output hit a quarterly record, as it ramps up output to capture more of a slower-growing market for raw materials.

Iron ore benefited from multi-billion-dollar expansion work underway in Australia that will lift fiscal 2014 output to 212 million tonnes, up from a previous target of 207 million, BHP (BLT.L) said in its fiscal first-quarter production report.

In petroleum, liquids output rose 16 percent, helped by a shift in focus at its U.S. shale holdings to focus more on oil production as U.S. gas prices sag.

BHP has warned mining companies face slowing demand growth for raw materials from China and elsewhere requiring greater emphasis on economies of scale to keep costs down.

The world’s biggest mining company has already cut planned spending for 2013/14 by 25 percent to $16 billion, and has earmarked a further decline for the following year.

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Is BHP looking to escape the nickel market? – by Ryan Newman (The Motley Fool – October 18, 2013)

http://www.fool.com.au/

BHP Billiton’s (ASX: BHP) rivals are once again suspecting that the miner could be on the move to offload its largest nickel assets as part of its strategy to heavily reduce costs and increase its focus on core operations.

As reported by The Australian Financial Review, it is believed that the miner had placed its Nickel West and Cerro Matoso mines up for sale earlier in the year. This belief was bolstered when the company’s new CEO, Andrew Mackenzie, notably excluded nickel from his “four pillar” strategy in May, which outlined the company’s core operations and focus areas moving forward.

Speculation has once again heightened that the sale of the assets could be a very real possibility – particularly after the company was forced to impair its Nickel West asset by US$1.2 billion, according to BHP’s annual report.

Meanwhile, many believe that right now could be the bottom of the nickel market which would increase the interest in BHP’s assets. Whilst now may not prove to be the most profitable time to part ways with the mines, it would allow the miner to focus more heavily on reducing operating costs and increasing productivity in other key areas.

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Australia’s iron ore miners shrug off glut fears – by James Regan (Mineweb.com – October 15, 2013)

http://www.mineweb.com/

Rio Tinto upped annualised output of the steel-making raw material by 20% in October, while BHP Billiton and Fortescue Mining are in the midst of robust expansion work.

SYDNEY (REUTERS) – Australia’s “big three” iron ore miners are set to unveil a boost in third-quarter production and will mine even more in the fourth quarter, ignoring forecasts of a looming supply glut in favour of capturing greater economies of scale.

Rio Tinto this month upped annualised output of the steel-making raw material by 20 percent to 290 million tonnes, while BHP Billiton and Fortescue Mining are in the midst of robust expansion work.

All three already mine ore at costs well below selling prices — thanks to a combination of rich grades and high volumes — and see any dip in prices as simply weeding out less competitive rivals.

Rio Tinto, which is set to post a 3 percent rise in third-quarter output against the previous quarter to 53 million tonnes on Tuesday, is expected to announce a further mine expansion to 360 million tonnes a year by a Dec. 3 meeting with investors.

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