Analyzing Why BHP Billiton's American Depositary Receipts Trade At Different Prices
Caiman Valores • 25 Comments
Caiman Valores • 25 Comments
Yesterday, 10:23 AM
- Three of the world's top five miners will need to step up asset sales in this year's H2 to meet a $14B full-year target as they race to cut debt, Reuters reports.
- Glencore (OTCPK:GLCNF, OTCPK:GLNCY), Anglo American (OTCPK:AAUKF, OTCPK:AAUKY) and Vale (NYSE:VALE) have $5.4B from asset sales, far short of their target, delaying efforts to reduce debt and improved their credit ratings.
- Asset sales lost steam amid the H1 rebound in commodity prices, as iron ore and coal prices rallied ~30% and copper prices rose ~7%, easing the sense of urgency for sellers while bidders waited for the rallies to fizzle, but most analysts and investors expect prices to fall during H2, as iron ore, coal and copper markets remain oversupplied.
- Vale, which hopes to sell up to $5B worth of assets this year, may come under more pressure as so far it has only fetched $269M from the sale of three iron ore carriers, while Glencore and Anglo appear to be more on track toward their respective goals of $4B-$5B and $3B in asset sales this year.
- BHP Billiton (NYSE:BHP) and Rio Tinto (NYSE:RIO) are considered well placed to buy assets, with interest in copper, but both have been surprised at the high prices that copper assets have fetched so far.
Yesterday, 7:45 AM
- Chinese iron ore miners are calling for an anti-dumping investigation into imports from top suppliers in Australia and Brazil.
- "Vale (NYSE:VALE), Rio Tinto (NYSE:RIO) and BHP Billiton (NYSE:BHP), which have dominated global iron ore trade, have defied the market and are still expanding despite prices being low since their strategy is to use low-priced dumping to crowd out higher-cost miners," according to the Metallurgical Miners' Association of China.
- Imports accounted for ~85% of China's total iron ore consumption, driving down capacity utilization at domestic iron ore miners and causing losses and shutdowns, the group says.
- But an analyst at Julius Baer notes that many of China's iron ore mines are vertically integrated into steel mills, thus "this looks like a tit-for-tat response from the steel mills who were feeling international pressure from steel anti-dumping investigations and tariffs."
Fri, Jul. 22, 8:58 AM
- Bidders for Anglo American’s (OTCPK:AAUKF, OTCPK:AAUKY) Australian metallurgical coal assets, including mines in Queensland that could fetch up to $1.5B, are in talks with banks for acquisition financing, Bloomberg reports.
- Coronado Coal and AMCI Capital are competing for Anglo’s Moranbah and Grosvenor mines with BHP Billiton (NYSE:BHP), which bid through its coal joint venture with Mitsubishi, according to the report, which adds that a group led by Glencore (OTCPK:GLCNF, OTCPK:GLNCY) has dropped out.
- Anglo CEO Mark Cutifani wants to raise $3B-$4B from asset sales to reduce debt and refocus the company as a miner of diamonds, platinum and copper.
Thu, Jul. 21, 3:45 AM
- A Brazilian state law to ban upstream tailings dams, the design responsible for Samarco's disaster in November, could be approved this year, Minas Gerais' environmental regulator told Reuters.
- Anderson Silva de Aguilar also said the iron ore mine, which is co-owned by Vale (NYSE:VALE) and BHP Billiton (NYSE:BHP), would not be resuming operations this year and may not in 2017 either.
Wed, Jul. 20, 4:04 AM
- Shares of both companies are in the red after the miners outlined several challenges in the country.
- BHP Billiton's (NYSE:BHP) fiscal 2016 iron ore guidance missed expectations by 3M tons because of its Samarco dam disaster.
- Anglo American (OTCPK:AAUKY) cut full year guidance for Brazilian iron ore production after posting mixed Q2 results.
Tue, Jul. 19, 7:22 PM
- BHP Billiton (NYSE:BHP) says it exceeded FY 2016 production guidance for petroleum, copper and metallurgical coal, but fell short of its iron ore production target.
- BHP's share of its iron ore exports totaled 227M metric tons, below its revised guidance of 229M tons and an initial target of 237M tons that was scuttled following the Samarco dam spill in Brazil.
- Total output at the Western Australia iron ore operations in the Pilbara was 257M metric tons, 2% above last year's record but short of guidance for 260M metric tons, with expectations for 265M-275M tons next year.
- BHP expects FY 2017 attributable iron ore production to rise to 228M-237M metric tons, excluding production from Samarco; the company says it cannot yet provide an update on Samarco's potential financial impacts on H2 2016 results.
- BHP's petroleum division produced 240M boe during FY 2016, above guidance of 237M boe, and copper production of 1.58M metric tons also beat guidance.
Thu, Jul. 14, 8:39 AM
- BHP Billiton (NYSE:BHP) says production at its Samarco iron ore joint venture with Vale (NYSE:VALE) is unlikely to restart this year, as the clean-up continues following last year's fatal dam collapse at the mine.
- BHP says Samarco's operations will restart only when it is safe to do so and when all regulatory approvals are granted.
- BHP also says Samarco is in talks to cut its workforce by ~40% to match expected lower production levels.
- Samarco has been closed since last November's tailings dam burst unleashed a mudflow that killed 19 people, left hundreds homeless and polluted a major river.
Tue, Jul. 12, 10:49 AM
- Southwestern Energy (SWN +8.4%) does not explicitly endorse new Obama administration regulations aimed at curbing the escape of methane gas from new wells and equipment, but it is among several prominent companies that agree that more methane controls are necessary, NY Times reports.
- SWN is helping to lead an industry group, One Future, which aims to reduce methane leakage to less than 1% of total U.S. gas production; other members of the group include Apache (APA +4.1%), BHP Billiton (BHP +3.1%), Hess (HES +4.1%) and Kinder Morgan (KMI +2.4%).
- SWN says the $14M it has spent on equipment, studies and other efforts to stem gas leaks has nearly paid for itself with the methane captured and sold.
- Others in the industry say new, more efficient extraction methods make additional oversight unnecessary and expensive, particularly given the sharp drop in natural gas prices in recent years.
Mon, Jul. 11, 8:49 AM
- Record iron ore shipments moved through Australia's Port Hedland terminal in June, as BHP Billiton (NYSE:BHP) and Fortescue Metals (OTCQX:FSUMF) operated near full capacity and inventories rose at Chinese ports.
- Port Hedland shipments to China rose to 34.5M metric tons in June from 31.7M metric tons in May, breaking the previous record of 33.9M in March; total iron ore shipments from the port jumped to 41.8M metric tons in June, also a record, from 39.4M in May.
- Rising production amid a drop in Chinese steel production led Australia's government on Friday to cut its iron ore price forecast, citing concerns over slowing growth in demand.
- Other relevant tickers include RIO, VALE and CLF.
Fri, Jul. 8, 8:27 AM
- Australia's government cuts its iron ore price outlook for next year by 20%, believing the YTD price rally is not sustainable; iron ore currently trades at slightly above $55/metric ton after swinging from a low of $38.30 in December to $70.46 in April.
- The latest guidance sees iron ore averaging $44.80 next year vs. the government's previous outlook for $56 given in the March quarter, while the forecast for 2016 is little changed at $44.20 from $45.
- "Despite the large movements in prices, the market fundamentals are broadly unchanged - demand growth is slow and the market remains well-supplied,” according to the report from the Department of Industry and Science.
- Relevant tickers: BHP, RIO
Wed, Jul. 6, 7:46 AM
Fri, Jul. 1, 6:38 PM
- Vale (NYSE:VALE) and BHP Billiton’s (NYSE:BHP) Samarco mining joint venture is seeking capital injections from its owners as it likely runs out of cash by August after last year's deadly tailings dam accident, Bloomberg reports.
- Samarco already has started exploring ways to restructure ~$1.6B in bank loans and may seek to put off bond payments until it can resume operations, according to the report.
- The JV’s debt is not guaranteed by its owners, which reportedly do not intend to make payments on the company’s behalf.
- Brazil’s Superior Court yesterday issued an interim order reinstating a $6.2B civil claim against Samarco, which Vale and BHP plan to appeal.
Fri, Jul. 1, 3:37 AM
- BHP Billiton (NYSE:BHP) is appealing the decision by a Brazilian court to reinstate a $6.2B public civil claim over last year's Samarco iron ore mine disaster.
- BHP and joint-venture partner Vale (NYSE:VALE) had agreed on a $2.3B settlement in March, but Brazil's Superior Court responded to an appeal from the Federal Prosecutor's Office by issuing an interim order suspending its ratification.
Tue, Jun. 28, 11:31 AM
- Morgan Stanley raises its iron ore outlook for this year and next, saying the top suppliers in Australia are managing the addition of new supply and steel demand in China will remain supported.
- The firm ups its overall 2016 forecast by 17% to $46/metric ton and its 2017 outlook by 13% to $42, according to its quarterly forecasts, although its revised call of $35/ton for the final three months of this year indicates its view that prices are still expected to drop below last year’s trough.
- Stanley says it is possible that the two biggest miners in Australia, BHP Billiton (BHP +2.5%) and Rio Tinto (RIO +2.5%), are “adjusting” the addition of new supply to accommodate weaker market conditions.
- Also: VALE +5.9%, CLF +4.5%.
Mon, Jun. 27, 3:43 AM
- BHP Billiton (NYSE:BHP) plans to boost its exploration budget by 29% to around $900M next year, as the global miner counts on new finds of oil and copper to drive growth rather than M&A.
- "We are investing at a time when most in our sector continue to reduce discretionary spend," said BHP's Laura Tyler.
- The figure represents 18% of the company's total capital budget of $5B over fiscal 2017.
- BHP -2% premarket
Thu, Jun. 23, 10:04 AM
- BHP Billiton (BHP +2.9%) pulled a $500M debt refinancing plan earlier this month at one of Australia's biggest coal export terminals after banks were reluctant to lend to the coal sector, Reuters reports.
- The decision highlights the industry's difficulty in trying to attract financing from lenders wary of coal's commercial outlook, sets back efforts to simplify complex debt arrangements at the Newcastle Coal Infrastructure project, and stalls BHP's plan to release cash tied up in the terminal as it looks to strengthen ts balance sheet.
- Smaller coal miners are facing similar problems in trying to refinance another Australian coal port, the Wiggins Island Coal Export Terminal, where Glencore (OTCPK:GLCNF, OTCPK:GLNCY) is the main backer.
BHP Billiton Ltd. engages in the exploration, development, production and processing of minerals, gas and oil. It operates through the following segments: Petroleum and Potash, Copper, Iron Ore, and Coal. The Petroleum and Potash segment explores, develops and produces oil and gas; plus the... More
Sector: Basic Materials
Industry: Industrial Metals & Minerals
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