Archive | BHP Billiton

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

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. Continue Reading →

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

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. Continue Reading →

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

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. Continue Reading →

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

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. Continue Reading →

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

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. Continue Reading →

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

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. Continue Reading →

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

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. Continue Reading →

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

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. Continue Reading →

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

(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. Continue Reading →

BHP stays course on Canada potash mine few expected built – by Rod Nickel (Reuters U.S. – May 18, 2017)

NEW YORK – BHP Billiton Ltd’s (BHP.AX) (BLT.L) Canadian potash mine will use advanced, cost-saving technology, giving it a competitive edge in a currently over-supplied fertilizer market, the executive in charge of the business said on Thursday.

Australia-based BHP aims to start potash production at Jansen, Saskatchewan in 2023, the company said this week, eventually producing 4 million tonnes annually.

The mine is already under construction but requires BHP’s board to approve another $4.7 billion to bring Jansen into production. That decision may happen as early as June 2018. Continue Reading →

BHP dumps Billiton in Australian identity push – by Peter Ker (Australian Financial Review – May 15, 2017)

BHP Billiton will seek to reclaim its Australian identity through a major rebranding exercise after conceding that it and other big companies were losing the trust of communities around the world.

The resources giant will today begin a $10 million advertising campaign that heralds the end of the “three blobs” logo and double-barrel name the company has used since the merger of BHP and Billiton in 2001.

The campaign refers to the company simply as BHP rather than BHP Billiton, and will eventually be followed by a change of the company’s official registered name to “BHP Limited”. The slim, lower-case letters in BHP’s existing logo will gradually be replaced by the bold, capital-letter logo BHP used prior to the merger. Continue Reading →

Elliott willing to back BHP board candidate as next chairman: source – by James Regan (Reuters U.S. – May 11, 2017)

SYDNEY – Elliott Management is willing to back a board member of BHP Billiton (BHP.AX) (BLT.L) to be its chairman upon the retirement of Jac Nasser despite deep reservations about its top management, a source close to the activist shareholder said on Thursday.

Elliott, founded by billionaire Paul Singer, is pushing for a $46 billion overhaul at BHP that includes spin offs, dismantling a corporate structure built on dual listings in London and Sydney and returning more money to shareholders. The Anglo-Australian miner has rejected the demands.

The activist investor blames Nasser and BHP’s top management for what it sees as bad investments by the world’s biggest mining house, particularly in U.S. shale gas, the source said. But Elliott believes “there are personalities on the board that are talented and capable”, with the “potential for someone to be selected from the existing board”, the source said. Continue Reading →

How to Stop CEOs Chasing Harebrained Ideas – by Chris Hughes (Bloomberg News – May 8, 2017)

Pay out cash to shareholders and that will stop bosses wasting it on empire-building deals. This is activism-101 and it’s a big component in the dual-fronted assault on Anglo-Australian miner BHP Billiton Ltd. The snag is that, in this industry at least, siphoning out cash to the max is a counterproductive way of keeping managers in check.

Hedge fund Elliott Advisors thinks BHP will generate $31 billion of excess cash flow in the next five years. It wants $33 billion returned to shareholders in a five-year buyback program to thwart management doing bad M&A.

Sydney-based Tribeca Investment Partners is just as concerned about misguided capital spending coming after bad M&A — throwing good money after bad. It cites BHP’s foray into the U.S. onshore energy business, calculating that this has delivered a cumulative cash outflow of $26 billion and substantial impairment charges, which may not be over. It wants the operation sold and part of the proceeds returned to investors. Continue Reading →

Australia to Block Any Attempt to Move BHP Billiton Listing – by Perry Williams and Matthew Burgess (Bloomberg News – May 3, 2017)

Australia would block any attempt to move BHP Billiton Ltd.’s main sharemarket listing to the U.K. as proposed by activist investor Elliott Management Corp., Treasurer Scott Morrison said.

“It is unthinkable that any Australian government could allow this original Big Australian to head offshore,” Morrison said in a statement Thursday. If BHP implemented Elliott’s proposals “it may commit a criminal offence and could be subject to civil penalties,” he said.

New York-based Elliott is meeting with BHP investors in Australia this week to outline proposals it made public last month for a corporate overhaul, higher shareholder returns and a spinoff of U.S. oil assets. BHP, which held about eight months of discussions with Elliott, has rejected the plans, saying the costs and risks outweigh any potential benefits. Elliott didn’t immediately respond to a request for comment. Continue Reading →

BHP Billiton’s stalker Elliott lands in Australia – by John Kehoe (Australian Financial Review – May 2, 2017)

Elliott Management executives have jetted to Australia to lobby BHP Billiton shareholders on the activist hedge fund’s campaign for the miner to shake up its business structure and return billions of dollars more in cash to shareholders.

Elliott’s investment director from Hong Kong, James Smith, arrived in Sydney on Monday to begin the charm offensive with Australian owners of the dual-listed miner. He will travel to BHP’s home city of Melbourne later this week to speak with shareholders about the hedge fund’s proposals, a source close to the New York headquartered firm said.

Mr Smith – an Englishman who splits his time between Hong Kong and London – was offering shareholders any clarity being sought on Elliott’s three main proposals for BHP and “listening for feedback”, the person said. Continue Reading →