BHP – Page 27 – Republic of Mining

Do BHP Billiton and Rio Tinto dividend cuts mean the glory days are over? – by Michael Smith (Australian Financial Review – March 16, 2016)

March 16, 2016

http://www.afr.com/

Dividends have long been the Holy Grail for Australian investors. The insatiable appetite for yield has driven investment strategies for decades to the point where the Reserve Bank of Australia has criticised companies for putting shareholder returns before investing in their own future growth plans.

Everyone loves dividends, and for good reason. In the current environment of low interest rates and stagnant earnings growth they are one of the only ways to reap returns of 4 per cent or more.

Fully franked dividends also keep the tax man at bay; under the Australian taxation system you don’t have to pay tax on dividends already paid by the company.

BHP Billiton CEO Sets Sights on Possible Copper, Petroleum Acquisitions – by Rhiannon Hoyle (Wall Street Journal – March 16, 2016)

March 16, 2016

http://www.wsj.com/

MELBOURNE, Australia— BHP Billiton Ltd. Chief Executive Andrew Mackenzie has spent three years tackling the legacy of his predecessors’ hunger for major deals, selling unwanted assets and taking multibillion-dollar write-downs on its U.S. shale gas operations.

Now, he says the world’s biggest mining company by market capitalization has an appetite for acquisitions again.

In an interview with The Wall Street Journal, Mr. Mackenzie said BHP is sizing up deals for petroleum and copper assets that could offer an immediate boost to profits amid what it now expects to be a prolonged period of low commodity prices.

Brazilian town devastated by dam burst wants mine reopened – by Marta Nogueira (Reuters U.K. – March 15, 2016)

March 15, 2016

http://uk.reuters.com/

MARIANA, BRAZIL – In November, Marcos de Freitas lost his home and everything he owned when a dam burst at a nearby mine released a flow of mud that buried his village.

Now, sitting in a house paid for by the company responsible, he wants the mine to reopen.

“I have nothing to complain about,” said the heavy set 55-year-old retired miner who fled his house, one of the oldest in the destroyed village of Bento Rodrigues, when the mud was up to his ankles.

“Samarco has to start producing again in order to create jobs,” he said. Samarco, which is jointly owned by Vale SA and BHP Billiton, is the mine operator.

Major iron ore miners won’t take pedal off the metal – by Amanda Saunders (Sydney Morning Herald – March 13, 2016)

March 14, 2016

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

Rio Tinto appears set to beat its own iron ore production targets for 2017 in a sign that hopes the proposed joint venture between Fortescue and Vale could reduce the oversupply in the global market will be short-lived.

Rio is not going to step back from the iron ore producers’ fight, and Samarco, BHP’s troubled Brazilian joint venture with Vale, is aiming to restart by the end of 2016 at 60 per cent capacity despite many observers expecting it to be mothballed for at least two to three years, or shut.

As well, the latest figures out of Port Hedland suggest that Gina Rinehart’s Roy Hill mine could be accelerating shipments quicker than expected, three months after its first ore was shipped to Asia. Roy Hill will be rushing to spread fixed costs out across as big a production base as possible.

Exclusive: BHP/Vale’s Samarco sees mine restarting at 19 million tonnes – by Marta Nogueira (Reuters U.S. – March 10, 2016)

March 11, 2016

http://www.reuters.com/

BELO HORIZONTE, BRAZIL – Samarco, joint venture between Brazil’s Vale SA (VALE5.SA) and Australia’s BHP Billiton (BLT.L), expects to restart production at its iron ore mine in Minas Gerais by the start of the fourth quarter, its chief executive told Reuters on Thursday, less than a year after a burst tailings dam there killed 19 people.

CEO Roberto Carvalho said iron ore pellet production for the initial two to three years would likely be at a reduced 19 million tonnes per year as the company develops a long-term plan to store the mining waste known as tailings.

Before the dam disaster, Samarco was producing about 30 million tonnes per year. “All our focus is turning to the restart,” Carvalho said at the company’s headquarters in Belo Horizonte, the capital of Brazil’s mining heartland. “We have talked to our clients, they have given us all the help possible and are awaiting the return of Samarco.”

BHP Scales Back Canada Potash Spending Amid Commodities Downturn – by Jen Skerritt (Bloomberg News – March 11, 2016)

March 11, 2016

http://www.bloomberg.com/

BHP Billiton Ltd., the world’s biggest mining company, is reducing spending on a potash mine in the Canadian prairies by about one-third amid the decline in global commodity prices.

The Australian company is allocating less than $200 million in capital expenditure in the current financial year to develop and study the feasibility of the Jansen project, down from $330 million in the previous 12 months, said Giles Hellyer, president of BHP’s Canadian unit.

“We’re doing more with less,” Hellyer said in a March 4 telephone interview from Saskatoon, Saskatchewan. “The intent is to be a lot more effective and efficient in what we’re doing and complete the work over a slightly longer time horizon.”

More iron ore doom from Cliffs Natural Resources boss Laurenco Goncalves – by Colin Kruger (Sydney Morning Herald – March 10, 2016)

March 10, 2016

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

It is a pity that Cliffs Natural Resources is a US-based miner, because it is only on his rare visits to our shores that Australia gets to catch the pearls of wisdom that pour forth from its chief executive, Laurenco Goncalves.

This is the guy who said last year that he couldn’t wait to get out of that “doomed” and “cursed” place that is the Australian iron ore market.

“As soon as I get to the end of life of mine in Australia, I’m out of there … I can’t wait to get out of the seaborne trade and let the Australians take that horrible business on their own hands,” he said in May. That sales spiel must go down a treat with the tyre-kickers who might be interested in buying its local mines.

Mining Firms Samarco, Vale and BHP Billiton Settle With Brazil Over Dam Disaster – by Paul Kiernan (Wall Street Journal – March 2, 2016)

March 3, 2016

http://www.wsj.com/

RIO DE JANEIRO—Mining companies responsible for a disastrous dam failure in Brazil last year signed an agreement with authorities Wednesday that could allow them to pay far less than the 20.2 billion Brazilian reais ($5.2 billion) originally sought by government lawyers.

Samarco Mineração SA and its parent companies, Brazilian mining giant Vale SA and Australia’s BHP Billiton Ltd., reached the settlement after weeks of haggling with federal and state authorities that had joined the lawsuit.

The deal represents a major milestone in the miners’ efforts to move past the Nov. 5 collapse of Samarco’s Fundão tailings dam, described by activists as the biggest accident of its kind. The dam released an avalanche of mud and mine waste that left 19 people dead and hundreds more homeless, as well as polluting some 400 miles of rivers in southeast Brazil’s Rio Doce basin.

Iron Ore’s 18% Rally Bucks Bears’ Forecasts as BHP, Rio Jump – by Jasmine Ng (Bloomberg News – March 3, 2016)

March 3, 2016

http://www.bloomberg.com/

Iron ore isn’t sticking to the script, at least for the bears. The commodity that was supposed to be weighed down again this year by rising low-cost supply and poor demand has soared 18 percent, establishing a foothold above $50 a metric ton.

The rebound, which means that iron ore has outperformed all the members in the Bloomberg Commodity Index in 2016, has probably been powered by restocking by Chinese mills and some weather-related disruption to shipments from Australia, according to Capital Economics Ltd. These supportive factors may prove temporary, it said.

Iron ore’s upswing has accompanied a revival in the price of other commodities including oil and industrial metals. Glencore Plc Chief Executive Officer Ivan Glasenberg said on Tuesday that raw materials have bottomed, and Australia & New Zealand Banking Group Ltd. said in a report on Thursday that commodity sentiment has turned in the last fortnight, citing gains in both crude and iron ore. Steel prices in China have also climbed.

Glencore joins the mining world’s gruppetto – by Matthew Stevens (Australian Financial Review – March 2, 2016)

March 3, 2016

http://www.afr.com/

Glencore boss Ivan Glasenberg is said to be pretty passionate about cycling and its Grand Tours. So he would be well aware of the term “gruppetto”. It is the pack of riders that sits at the back of mountain stages with that aim of just finishing the day inside the time limit. They are sprinters looking just to survive until conditions better suit their skills.

Consolidation before and during the long mining boom crafted five diversified global miners: BHP Billiton, Rio Tinto, Vale, Glencore and Anglo American. By the end of a sectoral recession of rare severity, even in this most cyclical of industries, this group of five could be permanently trimmed to two giants and the rest.

The question right now is whether or not Glencore has the wherewithal or the will to join BHP and Rio Tinto in their break away from big mining’s rapidly withering peloton.

UPDATE 1-Samarco to pay 24 bln reais in damages for dam disaster – by Anthony Boadle (Reuters U.S. – March 2, 2016)

March 2, 2016

http://www.reuters.com/

Mining company Samarco and its owners, BHP Billiton and Vale SA, reached a deal with the Brazilian government on Wednesday to pay an estimated 24 billion reais ($6.2 billion) in damages for a deadly dam spill in November.

Of the total, Samarco will pay 4.4 billion reais through 2018 into a fund to cover the cleanup of the spill from the tailings dam. From 2019 to 2021, payments will be between 800 million reais and 1.6 billion reais.

Further investment will be made for a period of 15 years as the company agreed to a lengthy environmental plan to regenerate the impacted area through replanting and dredging.

BHP, Rio Showing Bondholders $8 Billion of Love Warms Up Rally – by David Stringer and Benjamin Purvis (Bloomberg News – February 29, 2016)

February 29, 2016

http://www.bloomberg.com/

Bond investors are rewarding BHP Billiton Ltd. and Rio Tinto Group after the humbled mining giants cut dividends by as much as $8 billion to repair finances.

Credit assessors aren’t yet convinced. Dollar-denominated notes issued by BHP returned 3.4 percent in the month to Feb. 26, the most since 2009, while Rio Tinto’s rose 2.1 percent, set for its biggest advance in a year, according to Bank of America Merrill Lynch’s U.S. Metals, Mining & Steel Index.

That follows three months of declines as iron ore, the top earner for both companies, in December touched the lowest in daily prices dating back to May 2009.

BHP finally faces extent of commodity rout with long-needed dividend cut – by Ian McGugan (Globe and Mail – February 24, 2016)

February 25, 2016

http://www.theglobeandmail.com/

BHP Billiton Ltd. is slashing its dividend. This is good news. As painful as the cut might be in the short term, it demonstrates that management is finally recognizing the extent of its long-term challenge.

Until Monday, the world’s largest miner had stubbornly stuck to a progressive dividend policy despite years of falling commodity prices. BHP had promised to maintain or increase payouts year after year, even if it cost the company billions in badly needed capital.

It was an act of hubris. Trying to strap an ever loftier dividend onto the unpredictable ups and downs of the commodity market brings to mind a certain story that involves making wings out of wax, flying too close to the sun – and you know how it goes from there.

Samarco executives accused of homicide by Brazilian police over dam burst – by Cecilia Jamasmie (Mining.com – February 24, 2016)

February 25, 2016

http://www.mining.com/

Six top executives of iron ore miner Samarco, a joint venture between BHP Billiton (ASX:BHP) and Vale (NYSE:VALE), and one contractor have been accused of homicide over the deaths of 19 people who were killed in a dam burst last November.

Brazilian police in the state of Minas Gerais recommended “qualified homicide” charges for the chief executive of Samarco at the time, Ricardo Vescovi, and six others, local newspaper Veja reported (in Portuguese).

In Brazil only prosecutors, and not police, can legally bring criminal charges, but accusations from officials often precede formal charges.

BHP Billiton Ltd still likes giant Saskatchewan potash project, but not in any hurry to develop – by Peter Koven (National Post – February 24, 2016)

February 24, 2016

http://business.financialpost.com/

The world’s biggest mining company says it is still keen to build the world’s biggest potash mine, despite a severe bear market in the crop nutrient. But it sure doesn’t seem to be in a hurry.

Andrew Mackenzie, BHP Billiton Ltd.’s chief executive, told investors on Tuesday that he doesn’t expect the potash market to make a serious recovery until the early 2020s. “It’s a long way off,” he said on a conference call to discuss half-year earnings.

Melbourne, Australia-based BHP is in the midst of a US$2.6-billion investment to build production shafts at its Jansen project in Saskatchewan. Jansen would be a game-changer in the industry, as BHP is aiming to produce eight million tonnes of potash a year, which would amount to nearly 15 per cent of global supply.