Yesterday, 12:58 PM
- Australian miners BHP Billiton (BHP +0.5%) and Rio Tinto‘s (RIO +0.5%) dividend policies are not sustainable at current levels, Goldman Sachs says, as reported by Barron's.
- Goldman considers 20% of the miners' EBITDA - their 40-year long-term average - to be sustainable, but BHP and Rio currently are running at twice as much as the long-term average.
- The firm estimates BHP and Rio will generate a respective $15B-$18B and $11B-$17B in EBITDA; using its 20% EBITDA sustainable level, the miners could afford to pay out only $0.62 and $1.41 in annual dividends, 50% and 65% of the current level.
Yesterday, 9:57 AM
- The price of iron ore has dropped to its lowest level in at least seven years, Financial Times reports, but share prices of the world's top iron ore suppliers are higher in early U.S. trading: BHP +1%, RIO +0.4%, VALE +0.2%.
- The price of iron ore for China delivery hit $43.4/metric ton, a record low going back to 2008, amid slowing demand for steel in China and oversupply from the big miners.
- Through October, China's YTD steel output fell 2.2% Y/Y to 675M metric tons, while October output was down 3.1% Y/Y at 66M metric tons.
- Commodities specialist Andy Xie predicts iron ore prices will fall below $40 before year-end, and could sink as low as $30 for much of next year.
Yesterday, 7:59 AM
- The 2.2B cf torrent of mud and debris unleashed by the dam burst at Samarco's iron ore mine in southeastern Brazil has reached the Atlantic Ocean.
- The mud flowed downstream into the Doce River, where it devastated wildlife and compromised the drinking water source for hundreds of thousands of people; Brazil's Environment Minister predicts it may take up to 30 years to get rid of the toxic sludge from the Doce basin.
- Eleven bodies have been found since the dam burst on Nov. 5, but only seven of them have been identified; 12 people are still missing.
- At BHP’s annual meeting in Perth on Friday, protesters called on the company to do more to help with clean-up efforts, and Vale's (NYSE:VALE) headquarters in Rio de Janeiro has seen regular protests, but the government also has come in for strong criticism for the laxity of the dams’ inspection regime and Brazil’s weak environmental legislation.
Thu, Nov. 19, 3:14 AM
- BHP Billiton (NYSE:BHP) defended its progressive dividend policy at the company's shareholder meeting today despite this year's stock price slump amid slowing growth in China and recent mine disaster in Brazil.
- "Our starting point is to maintain the strength of the balance sheet through the cycle," Chairman Jac Nasser told investors. "The balance sheet must always come first."
- Although he was "disappointed" with BHP's share price, which has fallen over a third year-to-date, he noted that the resources business is a cyclical one.
Wed, Nov. 18, 6:15 PM
- Samarco, the joint mining venture owned by BHP Billiton (NYSE:BHP) and Vale (NYSE:VALE), says two more of its tailings dams in Brazil could be at risk of collapsing and that it is taking emergency measures to stabilize pressure levels at the at-risk dams.
- Company officials say both dams are operating with “safety factors" lower than those recommended for maintaining equilibrium between the dam’s structure and pressure from the wastes that could cause it to rupture.
- Officials are still trying to add up the economic and environmental costs of the Samarco dam burst almost two weeks ago that sent a huge wave of water and mining waste crashing into villages and farms many miles downstream in the Brazilian states of Minas Gerais and Espirito Santo.
Mon, Nov. 16, 6:28 PM
- The Samarco joint venture of BHP Billiton (NYSE:BHP) and Vale (NYSE:VALE) behind the Brazil dam burst that killed as many as 11 people earlier this month has agreed to set aside 1B reais ($262M) to fund initial cleanup efforts, public prosecutors say.
- The amount comes on top of 250M reais ($66.2M) in fines levied by Brazil's federal environmental regulator last week.
- Brazilian authorities and the companies are only beginning to work out the costs of the disaster; Deutsche Bank, for one, estimates the companies' final bill could top $1B.
- Credit Suisse says Samarco has a $1.17B insurance policy for “operational risk," but Vale says costs and fines as a result of the dam burst already have exceeded insurance against civil damages.
Mon, Nov. 16, 2:55 PM
- BHP Billiton (BHP +0.4%) says it is reviewing two other mining joint ventures in Peru and Colombia following the dam disaster at the Samarco iron ore mine in Brazil, which it jointly owns with Vale (VALE -1.7%).
- Cerrejón in Colombia is one of the world's largest open pit coal mines, and is owned equally by BHP, Anglo American (OTCPK:AAUKF, OTCPK:AAUKY) and Glencore (OTCPK:GLCNF, OTCPK:GLNCY); BHP and Glencore each have 33.75% stakes in Antamina, Peru's biggest copper and zinc mine, while Teck Resources (TCK +0.8%) holds 22.5% and Mitsubishi 10%.
- Vale says it will take several years for the Rio Doce river to recover after it was flooded with mud from a burst tailings dam run by Samarco, a joint venture between Vale and BHP Billiton
- Costs and fines already incurred as a result of the dam burst have exceeded insurance against civil damages, a Vale executive says.
Fri, Nov. 13, 7:59 AM
- In an update on the Samarco dam burst, BHP Billiton (NYSE:BHP) says mine tailings now extend 440 km (273 miles) downstream through remote mountain valleys from the mine site in Brazil's Minas Gerais state.
- Local authorities say 637 people have been evacuated and 11 communities affected, with 19 people still missing; nine fatalities have been confirmed.
- BHP's shares slipped below A$20 in early trading but recovered modestly after BHP released its update, but if the stock ends at current levels, it would be its lowest close since early 2005 - wiping out all gains created during China's economic boom and demand for minerals.
Thu, Nov. 12, 2:58 PM
- Brazil Pres. Rousseff announces preliminary fines worth 250M reais ($66.2M) against the Samarco mine where two waste dams burst, killing at least seven people and causing widespread destruction.
- Rousseff says the fines, imposed by Brazil's environmental regulator for violations including river pollution and damages to urban areas where water service has been suspended, could be followed by penalties from other federal or state agencies.
- The Brazilian president used her toughest language yet in comparing the disaster to the 2010 BP oil spill and citing the joint venture partners BHP Billiton (BHP -2.5%) and Vale (VALE -2%) by name as responsible for the consequences.
Thu, Nov. 12, 9:15 AM
- BHP Billiton (NYSE:BHP) it hit with a A$288M bill by the government of Australia's Queensland state over unpaid royalties that the company may have avoided by selling coal through its Singapore marketing hub.
- BHP says it has filed a formal dispute with the Supreme Court of Queensland over A$186M in royalties and A$102M in interest the Queensland Office of State Revenue has required it pay in relation to its share of the BHP Billiton Mitsubishi Alliance coal joint venture.
- BHP says it disagrees with the tax office on the proper basis for calculating the value of coal for royalty purposes under Queensland law.
- The latest hit takes the total bill in tax and royalties assessments on BHP's Singapore marketing hub to A$810M.
Thu, Nov. 12, 2:13 AM
- Brazil is increasingly concerned over the rising death toll and contaminated mud flowing through two states as a result of BHP Billiton (NYSE:BHP) and Vale's (NYSE:VALE) dam disaster.
- "If federal fines are applicable, we will apply them," Environment Minister Izabella Teixeira told reporters. "There will be punishment, and under Brazilian law the environment has to be repaired."
- Her remarks are the strongest yet from the government, which was caught off-guard by the dam failure which killed at least eight people and left more than 20 missing.
- Previously: BHP, Vale CEOs coordinate Brazil dam breach response (Nov. 11 2015)
Wed, Nov. 11, 5:41 PM
- The CEOs of BHP Billiton (NYSE:BHP) and Vale (NYSE:VALE) made their first public appearance today in Brazil at the scene of the dam at their jointly owned subsidiary that burst and unleashed a deadly avalanche of mud and water.
- BHP's Andrew Mackenzie and Vale's Murilo Ferreira offered no explanation of what might have caused the disaster and said their current priority is to save lives and comfort victims; Ferreira said the causes of the accident would be fully investigated afterward.
- The CEOs say they will support the Samarco joint venture in creating an emergency fund for rebuilding works and to help the affected families and communities.
- Ferreira declined to answer questions about whether his company had been dumping its own mine waste into Samarco’s dam system before it broke, as has been suggested by Brazilian prosecutors and local officials.
Wed, Nov. 11, 3:18 PM
- BHP Billiton (BHP -3.2%) sinks to seven-year lows on speculation about a potential dividend cut in the wake of the Brazilian dam failure, Financial Times reports.
- "A reduction in the otherwise sacrosanct dividend may prove a pragmatic response to this tragic accident," says analysts at Investec, which places a $2B net present value on BHP’s Samarco share and forecasts annual earnings of $220M, equivalent to ~5% of the group total.
- Deutsche Bank forecasts Samarco would restart production within 18-36 months and expects insurance to cover clean-up costs, though possibly not loss of income; assuming BHP freezes its dividend to 2018, Samarco would "not be a decisive issue” on the payment policy, the firm says.
- Earlier: WSJ: Samarco may not shield BHP, Vale from Brazil dam breach cost
Wed, Nov. 11, 10:39 AM
- It is too soon to quantify with certainty the financial toll of the Brazilian dam disaster for BHP Billiton (BHP -2.4%) and Vale (VALE -2.9%), but Deutsche Bank estimates the companies’ bill could top $1B and Morgan Stanley says the costs could be anywhere from "tens of millions to hundreds of millions."
- The limited liability company, Samarco, the two companies set up years ago for protection from litigation does little to shield its parents from big fines, cleanup and legal costs, Brazilian authorities and lawyers say; BHP and Vale say Samarco - not them - are responsible for the mine’s operations.
- If Samarco itself can’t cover the cleanup and legal costs, the Brazilian government can “go after the assets of the shareholders, Vale and BHP,” according to an environmental lawyer who has represented people affected by pollution in Minas Gerais, the state where the dam breach occurred.
- Earlier: Prosecutor cites negligence in Brazil dam failure
Wed, Nov. 11, 7:53 AM
- Negligence probably played a role in last week's collapse of a mine waste dam that devastated communities and killed at least six people, Brazilian prosecutors say.
- BHP Billiton (NYSE:BHP) and Vale (NYSE:VALE) have not commented on possible causes of the accident at their 50-50 Samarco joint venture which operated the two dams that failed.
- A prosecutor also says there is evidence that Vale may have been dumping detritus from its own nearby iron ore mines into a waste reservoir that further pressured the dam system.
- Samarco has been issued a court order requiring it to collect and preserve evidence related to the dike failures that triggered the deadly mudslide, in a moved aimed at ensuring victims can obtain compensation for damages.
- Fears are growing that the sludge, which has flowed into local rivers, could contaminate the water supplies of more than 500K people in the Minas Gerais state and neighboring Espirito Santo.
Tue, Nov. 10, 2:57 PM
- Rio Tinto (RIO +1.4%) is upgraded to Overweight while BHP Billiton (BHP -0.4%) is downgraded to Equal Weight at Barclays, which says Rio has a relatively attractive balance sheet in a struggling industry.
- But Barclays downgrades its overall mining sector view to Neutral, adding that it would have reverted to our Negative call of 2013-14 if not for the recent pickup in some Chinese data; looking forward, the firm fins it "hard to see what might pull the sector out of its tailspin."
- The firm sticks with its Overweight rating for Glencore (OTCPK:GLCNF, OTCPK:GLNCY), and rates Anglo American (OTCPK:AAUKF, AAUKY]]) and Vale (NYSE:VALE) at Underweight.
BHP Billiton Ltd is a natural resources company. The Company is engaged in the producing commodities, including iron ore, metallurgical and energy coal, conventional and unconventional oil and gas, copper, aluminium, manganese, uranium, nickel and silver.
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