BHP – Page 33 – Republic of Mining

Rio Tinto and BHP Billiton to keep dividends despite pressure, says Macquarie – by Stephen Cauchi (Australian Financial Review – September 28, 2015)

September 28, 2015

http://www.afr.com/

BHP and Rio Tinto would have to trim their dividends in coming years due to crashing commodity prices, according to research released on Monday by Macquarie, with Rio tipped to be the better performer of the two.

Both companies remain committed to progressive dividend policies, in which dividends rise in line with earnings per share. The dividends would continue, said Macquarie. But the bank nevertheless trimmed its forecasts for both companies.

For BHP, “we now only factor a flat payment of $US1.24 a share for the next three years, a payment of $US6.5 billion”.

For Rio, “we have reduced our dividend growth assumptions … with our dividend compound annual growth rate reducing from 4 per cent to 2 per cent over the next three years.”

BHP’s dividend per share in 2015, averaged over 12 months, was $1.68. Rio’s interim 2015 dividend per share was $1.44.

BHP Billiton in climate caucus as China joins carbon war – by Matthew Stevens (Australian Financial Review – September 25, 2015)

September 25, 2015

http://www.afr.com/business/

BHP Billiton’s membership of a new coalition of high powered commerce with the lofty aim of assisting the transformation of emerging nations into low carbon economies says much about the gathering pressures of climate change on those who make money in the fossil fuel cycle and just as much about the Global Australian’s radically changed view of its place in the world.

BHP was formally invited to become a foundation member of an “energy transitions commission” in a letter to chief executive Andrew Mackenzie penned by Royal Dutch Shell boss Ben van Beurden.

The Shell initiative, which will be formally announced in Houston on Monday, has been made all the more timely by China’s confirmation that it is contemplating the imminent introduction of a cap-and-trade carbon trading scheme and of stricter limits on the level of public funding for “high carbon projects”.

This is patently a deeply worrying development for big coal. China’s economic development is powered by electricity and that means it sits front and centre to any and all the optimism that the miners can muster about the medium and long-term outlook for coal.

Potash Pessimism Clouds Prospects for BHP’s Jansen Project – by David Stringer (Bloomberg News – September 21, 2015)

September 22, 2015

http://www.bloomberg.com/

BHP Billiton Ltd.’s prospects of building potash into the fifth pillar of its portfolio of big-ticket businesses is looking a long way off. That’s the view of Macquarie Group Ltd., which has a “very pessimistic view” of the market.

The world’s biggest miner’s Jansen project in Canada, which has already consumed about $3.8 billion in capital, is unlikely to be developed unless prices rise, according to Macquarie. The bank has cut its long-term price forecast by 16 percent to $280 a metric ton.

“Our base-case scenario for BHP assumes the indefinite deferral of Jansen’s development,” Macquarie analysts wrote in a note to clients dated Sept. 21. The company will probably favor development of less capital intensive petroleum and copper projects, they said.

Mosaic Co., the largest U.S. producer of potash fertilizer, said Monday it plans to reduce output as low crop prices continue to erode farmer demand for agricultural products.

Trade Slump Threatens Global Growth, Warns BHP Billiton Chief – by Rhiannon Hoyle (Wall Street Journal – September 16, 2015)

September 18, 2015

http://www.wsj.com/

Andrew Mackenzie hits out at protectionist policies he says pose a risk to the world economy

The head of the world’s largest mining company warned that a slump in international trade will jeopardize global growth just as major economies are struggling to prevent another downturn.

Andrew Mackenzie, chief executive of BHP Billiton, said trade restrictions such as the U.S. crude-oil export ban were hampering global commerce—which is lagging far behind its historical pace of expansion—and would limit job growth and stifle innovation.

He cautioned governments world-wide against introducing new barriers, such as tariffs on steel, to protect domestic industries.

“Protectionism is the grit in the engine,” Mr. Mackenzie said Wednesday during a speech in Washington, according to prepared remarks seen in advance by The Wall Street Journal. “Job creation, economic growth and innovation: all are jeopardized by the pressure placed on global trade over the last decade.”

BHP’s Andrew Mackenzie more bullish on China – by John Kehoe (Australian Financial Review – September 17, 2015)

September 17, 2015

http://www.afr.com/business/mining/

BHP Billiton chief executive Andrew Mackenzie has signalled that China may have turned a corner, saying he had shifted from a slight “bear” on the world’s second largest economy three months ago to once against siding with the China “bulls”.

Mr Mackenzie, speaking in Washington, said BHP’s key commodities including iron ore, coal, copper and oil were “still flowing” through Chinese ports and there was no inventory build-up.

“If we compare to three or four months ago, things are a little better, not worse,” Mr Mackenzie said after delivering a speech to the US Chamber of Commerce.

BHP’s business activity offers a sneak peak into key sections of the Chinese economy, because the miner is a large supplier of commodities used to construct buildings, bridges, cars and other metals-intensive objects.

A range of recent disappointing economic data suggests Australia’s biggest export market may be slowing faster than most economists had anticipated.

Robots Will Help Iron-Ore Miners Survive Price Rout – by Luzi-Ann Javier (Bloomberg News – September 10, 2015)

September 11, 2015

http://www.bloomberg.com/

When the rout in prices ends for the world’s iron-ore producers, those left standing probably will have more robots on their side.

Automated drills and driver-less trucks are among the new tools employed by the four biggest companies, including BHP Billiton Ltd., in a bid to preserve profit margins during a bear market that began more than two years ago. Using more technology helped reduce costs at Rio Tinto Plc by 8 percent since 2013, even as it boosted output by 5 percent, according to Paul Young, an analyst at Deutsche Bank AG in Sydney.

Improvements by top producers is defying a productivity collapse for the rest of the mining industry, which consultant McKinsey & Co. says declined as much as 28 percent in the past decade, forcing smaller operators to shut.

With demand for iron-ore slowing in China, the world’s biggest user, prices are probably headed lower as major suppliers expand output by tapping low-cost reserves, mostly in Australia, according to Citigroup Inc. The top four companies will see their share of the global market jump to 79 percent in 2018 from 64 percent in 2010, the bank said.

Rio Tinto Expects Solid Demand for Iron Ore – by Rhiannon Hoyle (Wall Street Journal – September 3, 2015)

September 4, 2015

http://www.wsj.com/

Mining company stays confident in China’s steel market, despite country’s slowdown

SYDNEY— Rio Tinto PLC told investors it expects world-wide demand for iron ore to keep growing despite China’s economic slowdown, as the company projected a rising appetite for steel in coming years.

On Thursday, Rio Tinto forecast 2.5% average annual growth in global steel demand for the next 15 years. Emerging markets are expected to take on an expanded role, with the mining company predicting that non-Chinese steel demand will rise 65% by 2030.

While Chinese steel output has waned recently, Rio Tinto said it remained confident in the country’s steel market. It stuck with an earlier projection that Chinese crude steel production will reach about one billion metric tons by the end of next decade. China produces roughly half the world’s steel, and its annual production is currently at roughly 800 million tons.

A global glut of steel and concerns over China’s economic prospects, have hurt prices for iron ore, the biggest ingredient in steelmaking.

WA chills as BHP Billiton, Rio Tinto and Fortescue cut $20b spending – by Julie-anne Sprague (Australian Financial Review – August 30, 2015)

August 31, 2015

http://www.afr.com/

A dramatic $20 billion cut in operational spending by the nation’s three biggest iron ore miners is chilling a West Australian economy already under stress from falling investment in resources-related construction.

Analysis by The Australian Financial Review reveals that since 2012, BHP Billiton, Rio Tinto and Fortescue Metals Group have cut the amount they spend on extracting resources by $US14.3 billion ($19.9 billion).

While this figure includes BHP and Rio’s global operations, the majority of the cuts have been generated from their West Australian iron ore operations.

This excludes massive cuts to capital expenditure. With laser like precision the miners are tightening the cost screws beyond cutting staff and salaries.

They’re cutting meals served on flights to remote mine sites, pulling biscuits from the tea rooms and reducing the number of uniforms issued to staff.

Iron and Steel: BHP’s big admission – by Kip Keen (Mineweb.com – August 26, 2015)

August 26, 2015

http://www.mineweb.com/

Steel demand in China is expected to be what BHP once thought.

HALIFAX – Just a couple of weeks ago I argued BHP and Rio should defend – in detail – their bullish steel demand forecasts in China given the growing number of forecasters that say the peak has already past.

Recall that Rio Tinto and BHP have long stuck to forecasts putting peak steel demand in China at, or over, a billion tonnes a decade or so from now. Others see it behind us already.

Well, I haven’t seen that defense, yet. We got a major revision of steel demand announced to the market instead.

In outlining its year-end financials August 25, BHP slashed its forecast of Chinese demand a decade or so from now by some 100 million tonnes steel.

A half year ago BHP argued peak demand would come in the mid-2020s somewhere around 1 billion to 1.1 billion tonnes.

COLUMN-BHP downgrades China steel forecast but keeps iron ore strategy – by Clyde Russell (Reuters U.S. – August 25, 2015)

August 26, 2015

http://www.reuters.com/

LAUNCESTON, Australia, Aug 26 (Reuters) – One of the first steps in recovering from a debilitating condition like alcoholism is admitting you have a problem. It seems BHP Billiton has finally started down this path with iron ore.

In announcing a 52-percent plunge in annual profit on Tuesday, Chief Executive Andrew Mackenzie also lowered BHP’s forecast for the peak in Chinese steel output to between 935 and 985 million tonnes by the mid-2020s.

This was down from the previously long held target of 1 to 1.1 billion tonnes that had underpinned BHP’s massive expansion of its iron ore mines, which has more than doubled output in the past five years to a total of 254 million tonnes in the 2014-15 financial year.

The scaling back of BHP’s China steel forecast leaves Sam Walsh, the chief executive of rival Rio Tinto, as one of the last holdouts for a peak above 1 billion tonnes.

Walsh said after releasing Rio’s results, which saw a 43-percent drop in underlying earnings, that his company was “holding the line” on the 1 billion tonne by 2030 forecast, saying this represented growth of just 1 percent per year over the period.

Can You Read China? Top Mining CEOs Disagree on Biggest Customer – by Thomas Biesheuvel (Bloomberg News – August 25, 2015)

August 25, 2015

http://www.bloomberg.com/

What on earth is going on in China?

Two of the biggest mining companies feeding the country’s appetite for raw materials can’t even agree on whether there’s an answer to the question.

Andrew Mackenzie, head of BHP Billiton Ltd., is bullish on his ability to comprehend a country that consumes more commodities than any other — and whose economic woes have shaken markets around the globe this week.

“We don’t find China impossible to read,” Mackenzie, chief executive officer of the world’s biggest mining company, said Tuesday.“We’ve been at this game for decades.”

His certainty conflicts with billionaire mining rival Ivan Glasenberg’s admission last week that he couldn’t read the world’s second-largest economy right now and neither could anyone else.

BHP Billiton posts worst profit in 11 years, maintains dividend – by Peter Ker (Sydney Morning Herald – August 25, 2015)

August 25, 2015

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

Analysts say BHP Billiton is offering shareholders “the dividend yield of a lifetime”, after it grew dividends by 2 per cent during a year that its profits slumped by 52 per cent to their lowest level in more than a decade.

The $US0.62 dividend announced by BHP on Tuesday confirmed the miner’s pledge to maintain a “progressive” dividend despite the deliberate shrinking of the company through the spin-out of South32 earlier this year.

The pay out came as the resources giant posted a $US6.4 billion underlying profit, which was well below the $US7.5 billion that analysts had expected.

BHP has not posted a profit this low since the earliest days of the mining boom in 2004. The statutory profit was 86 per cent lower at $US1.9 billion. But despite the result, BHP’s London shares have surged by more than 8 per cent in early trading.

The company’s earnings were always going to struggle amid a broader collapse in commodity prices during the 2015 financial year.

Iron Billionaire Mauls ‘Market Vandalism’ as Rio Tinto Hits Back – by Jasmine Ng and David Stringer (Bloomberg News – August 23, 2015)

August 24, 2015

http://www.bloomberg.com/

Iron ore prices collapsed this year as the biggest miners committed market vandalism by overproducing, according to Fortescue Metals Group Ltd. Rio Tinto Group fired a salvo in response, saying the analysis is overblown.

“The logic that you keep expanding just because you can squeeze an extra ton out of your machines, applies well to mining juniors,” Chairman Andrew Forrest said in a commentary on Monday as the company reported a slump in full-year profit. But it “is market vandalism and self-harm when industry leaders do it,” he said, without identifying any companies.

Iron ore sank last month to the lowest in at least six years as Rio Tinto and BHP Billiton Ltd. in Australia and Brazil’s Vale SA boosted cheap supply, betting higher volumes would offset lower prices. Fortescue will hold volumes steady this year, although it was ready to expand if demand revived, according to Forrest. Rio said Monday that Forrest’s remarks about the market were inconsistent, while BHP declined to comment.

“Iron ore is inelastic in demand,” Forrest said using a term that suggests consumption doesn’t change with price.
Once users’ demand has been met, “any further product offering will see the price collapse. We have seen that this year.”

Nickel woes push South32 shares to fresh low point – by Michael Roddan (The Australian – August 18, 2015)

August 18, 2015

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

BHP Billiton spin-off South32, which launched on the sharemarket with high hopes in May, tumbled to a new low on the ASX today amid a global commodity crunch, with shares down more than 30 per cent from their high point shortly after listing.

The diversified miner (S32), which holds BHP’s former non-core coal and base metal assets, has been hit by weak commodity prices and soft global demand amid a rising US dollar.

The shares, which hit a peak of $2.37 after listing, fell as much as 3.4 per cent to $1.56 in today’s trade, taking the total decline from the posting-listing high to 34 per cent.

South32, a miner of metals such as nickel, coal, silver, aluminium and zinc, has seen commodity prices crash during its short life. Bloomberg’s commodities index slumped to its lowest point in 13 years recently.

The prices of nickel, copper and zinc are all hitting their lowest points since 2009, as concerns about slowing economic growth in China are pushing industrial metals down.

NEWS RELEASE BHP BILLITON CELEBRATING 130 YEARS OF HISTORY (August 13, 2015)

August 14, 2015

BHP Billiton is today celebrating the 130 year anniversary of the incorporation of BHP and its significant contribution to the Australian economy and society for more than a century.

BHP was formed in 1885 after a rich silver and lead deposit was discovered by Charles Rasp on a rocky outcrop known as the ‘Broken Hill’ in western New South Wales two years earlier.

BHP Billiton CEO, Andrew Mackenzie, said the milestone was an opportunity to reflect on the Company’s long history and events that shaped its culture.

“It’s not often that we get the opportunity to stop and take a look at where we have come from, but history has a lot to teach us,” he said.

“From humble beginnings mining silver and lead at Broken Hill and tin at Billiton (Belitung) island, Indonesia, in the mid-1800s, it has been a long journey to becoming the world’s largest diversified resources company.