Sep. 24, 2014, 10:10 AM
- BHP Billiton (BHP +0.5%) is considering a secondary listing in London for a new company it is spinning off containing non-core mining assets in commodities including aluminum and manganese, WSJ reports.
- The spun-off company is currently planned to have a primary listing in Australia and a secondary listing in South Africa, which has drawn the ire of some London-based fund managers.
- Analysts say the new company could have a valuation of ~A$16B.
Sep. 23, 2014, 7:57 AM
- BHP Billiton (NYSE:BHP) and Mitsubishi say they plan to cut ~700 jobs from their joint Australian coal mining operations in central Queensland state, continuing a cost-cutting drive that has been going on for more than 18 months.
- The BHP-Mitsubishi Australian JV is the world's biggest exporter of steelmaking coal
- Coking coal prices are near their lowest levels in seven years as rising supplies of the commodity have outpaced demand; this year alone, prices have fallen more than 20%.
Sep. 22, 2014, 3:47 PM
- Cliffs Natural Resources (CLF -8.5%) plunges to 52-week lows as worries grow over the potential for an economic slowdown in China.
- Chinese steel production grew a mere 1% Y/Y in August, well off 2.6% YTD and 9%-10% growth recognized over the past few years; Wells Fargo's Sam Dubinsky views the data as negative for iron ore pricing, and thinks it means trouble for CLF, whose results could disappoint as the value of assets likely will diminish as pricing continues to fall.
- Also, a Bloomberg weekend report says coal demand in China may peak as soon as this year, which could further hurt coal miners such as CLF.
- Iron ore giants are lower: BHP -3.2%, RIO -2.7%, VALE -4.8%.
- Coal producers: ANR -9.7%, WLT -9.2%, ACI -7.7%, CLD -4.6%, BTU -4.4%, WLB -2.7%.
Sep. 16, 2014, 10:26 AM
- China says it will enact new laws banning the import and local sale of low-grade coal starting next year in a bid to curb its air pollution problem, with tough requirements in major coastal cities set to hit Australian miners such as BHP Billiton (BHP -0.4%), Rio Tinto (RIO -0.6%) and Glencore (OTCPK:GLCNF, OTCPK:GLNCY).
- China accounts for ~25% of Australia's coal exports, taking 54M metric tons of thermal coal and 30M metric tons of metallurgical coal from Australia in 2013; consultant Wood Mackenzie says all the thermal coal exceeded the new ash limit, while the met coal was below the limit.
- The most stringent requirements are for cities in the southern Pearl River Delta, the eastern Yangtze River Delta and three northern cities including Beijing, Tianjin and Hebei; the areas will be banned from burning coal that has more than 16% ash and 1% sulfur.
- Also, YZC -0.5%, KOL -0.4%.
Sep. 15, 2014, 12:42 PM
- News that China’s industrial production growth in August slipped to its lowest level since the 2008 global financial crisis could cause iron ore prices to extend their slide after reaching their lowest level in five years.
- Morgan Stanley says in a report that the price of iron ore could drop to as low as $70/ton from the current level of ~$82, but adds that prices may rebound towards $90/ton by year-end as China’s seasonal demand typically weakens before picking up again in Q4.
- Stanley’s forecast for a rally in the final quarter follows a similar prediction last week from Vale (VALE +0.8%), the world’s largest supplier, which said prices may be poised for a rebound to as much as $100/ton by year-end because of declining inventory at ports.
- Also: RIO +0.6%, BHP -0.8%.
Sep. 10, 2014, 5:15 PM
- Iron ore continues to slide, hitting fresh five-year lows on concerns about rising supply and slowing demand.
- Today’s decline - the price of benchmark ore for immediate delivery into China dropped another $1 to $82.20/metric ton - came as Goldman Sachs analysts wrote of "the end of the Iron Age," saying the long period of above trend in profitability enjoyed by the iron ore industry has been destroyed by the billions of dollars major producers have ploughed into new, low-cost capacity.
- The steelmaking material, which is critical to the profitability of several large mining groups including BHP Billiton (NYSE:BHP), Rio Tinto (NYSE:RIO) and Vale (NYSE:VALE), has dropped by nearly 40% this year, the worst performance among metals and bulk commodities.
- Goldman forecasts $80 iron ore next year and lowers its estimates for 2016 and 2017 to $79 and $78, respectively; Goldman says big producers will still be able to generate good returns at those prices but their ability to return capital to shareholders will be impaired.
Sep. 4, 2014, 11:26 AM
- BHP Billiton (NYSE:BHP) says it expects to join the bidding to develop Mexico’s deepwater oil fields when the country opens its offshore resources to foreign explorers next year.
- A move into Mexican waters would expand BHP’s interests in the Gulf of Mexico, which includes two platforms it operates and a stake in production from three others; BHP currently produces ~100K boe/day in the Gulf.
- BHP says it is initially interested in helping develop Mexico’s offshore assets rather than extending its shale expertise onshore; it was high bidder on 14 offshore blocks in a U.S. lease sale last month, including one area along the Mexico border.
Sep. 2, 2014, 11:48 AM
- Australia's conservative government earlier today repealed an unpopular tax on mining company profits, fulfilling a pledge made during last year's national election and handing Prime Minister Abbott a political victory while pleasing the country's big mining companies.
- Abbott believes the repeal, alongside the scrapping of the Labor Party's carbon tax in July, will convey to overseas investors that Australia would be more amenable to business interests.
- "This will be a positive step for investment and good for jobs in the mining sector," Rio Tinto (RIO -0.2%) CEO Sam Walsh says.
- The tax was complicated and focused on iron ore and coal miners of a certain profitability level but certain rules allowed miners to use prior capital spending as a tax deduction; BHP Billiton (BHP -0.5%) paid $200M in mining tax in FY 2013 and $24.8M in FY 2014, but it is believed all payments by Rio were refunded by the tax office.
Sep. 2, 2014, 7:56 AM
- BHP Billiton (NYSE:BHP) and Rio Tinto (NYSE:RIO) look to open higher after Deutsche Bank analysts say an upside production surprise is in store at the Escondida copper mine in Chile, in which BHP has a 57.5% stake and Rio a 30% stake.
- A strategy to run three plants at the mine may be adopted by the companies in 2015, which could increase earnings at BHP and Rio Tinto by 2%-3% in the next couple of years, Deutsche Bank says.
- BHP +1.2%, RIO +1% premarket.
Aug. 29, 2014, 10:55 AM
- Iron ore prices are falling for a 10th straight day and have dropped 8.4% this month to five-year lows on concerns that global supplies are topping demand just as China’s recovery shows signs of faltering.
- Iron ore demand seems to be cooling in China, Commerzbank analysts say, adding that the usual seasonal uptick in Chinese demand likely will fail to materialize this year.
- Supply in the seaborne market also remains plentiful, where output is expected to exceed demand by 72M tons in 2014 and 175M tons in 2015, and prices will average $106/ton this year and $80 next year, Goldman Sachs estimates.
- Global miners are mostly lower following big losses yesterday: SID -2.6%, VALE -1.6%, CLF -1%, RIO -0.2%, BHP +0.2%.
Aug. 28, 2014, 2:25 PM
- Concerns about falling iron ore prices are sending global miners and steel companies sharply lower: CLF -5.8%, SID -5.7%, VALE -4.4%, RIO -3.9%, X -3.9%, BHP -2.5%, ANR -2.5%, MT -2.4%.
- There’s too much supply of iron ore and prices will continue to fall further, deepening a slump that has hurt profits at the biggest miners, according to the head of Austria’s largest steelmaker.
- Iron ore prices fell to their lowest level in five years today to $87.30/ton, the lowest since 2009; Voestalpine CEO Wolfgang Eder sees prices at $90-$100/ton for the rest of 2014 before settling at $80-$90 in the medium term.
Aug. 27, 2014, 6:58 PM
- Commodity trader and miner Glencore (OTCPK:GLCNF, OTCPK:GLNCY) and Chinese nickel producer Jinchuan Group are the front runners to buy BHP Billiton's (NYSE:BHP) Australian Nickel West division, Reuters reports.
- Estimates of Nickel West's value vary greatly, with some analysts and industry sources saying it's worth up to a $1B while others tag negative figures to the asset that they say is burning cash.
- Nickel West was not included in BHP's de-merger plans announced last week, but CEO Andrew Mackenzie said shortly thereafter that the company was in talks to sell all or part of the unit.
Aug. 20, 2014, 3:17 PM
- ConocoPhillips (COP +0.7%) beat out BP (BP -0.1%) to win one of the most contested tracts of today's western Gulf of Mexico lease sale, entering the event's highest apparent bid of $16.7M for Alaminos Canyon block 431.
- However, BP easily submitted the most bids (32) and was the apparent high bidder on 27, totaling $22.8M, while BHP was next with 14 bids comprising $21,8M; Chevron (NYSE:CVX) submitted just five bids but tallied the highest sum of high bids, totaling $25.8M.
- Shell (RDS.A, RDS.B) made just one offer in the sale, for territory near its Perdido developments; its $1.75M bid was enough to win Alaminos Canyon block 905, edging out the only other competitor, Stone Energy (NYSE:SGY).
Aug. 19, 2014, 6:29 PM
- BHP Billiton's (NYSE:BHP) move to spin off a raft of assets it deems non-core - businesses that employ ~25% of the company's current workforce but deliver less than 10% of its profits - creates a new midsize metals player that could become a prime takeover target for rivals.
- WSJ mentions Glencore (OTCPK:GLCNF, OTCPK:GLNCY) as a potential suitor, and Mick Davis, the former CEO of Xstrata who left the company when it merged with Glencore, is on the lookout for acquisitions for his new investment vehicle.
- On the other hand, the new BHP entity could suffer from dis-synergies after the spinoff, potentially facing higher costs in borrowing funds and procuring supplies.
Aug. 19, 2014, 2:38 PM
- BHP Billiton (BHP -3.4%) CEO Andrew MacKenzie said prospective partners for its proposed Jansen potash mine in Saskatchewan may be deterred by current market conditions for the crop nutrient.
- While BHP would like a partner to help develop the project, the CEO said after reporting earnings and a plan to spin off some assets that "we are not in a hurry, and we have to take account of how current market conditions have perhaps made some of the potential partners less interested than they might have been."
- Analysts say Jansen may cost $16B to develop; BHP has said it is cutting spending on Jansen by ~25%, but MacKenzie said today that construction of a mine shaft at the site is proceeding, albeit at a reduced pace.
Aug. 19, 2014, 7:59 AM
- Investors were expecting BHP's move to simplify the company to its "four pillars" of iron ore, copper, coal and petroleum, but they also expected a stock buyback in the neighborhood of $5B; they didn't get it, and the stock is -3.6% premarket.
- BHP had said it was targeting net debt of ~$25B before it would consider returning extra capital to shareholders, but even after reaching that target - net debt at June 30 was $25.8B - it decided it would only go ahead when it could return capital in "a consistent and predictable manner."
- The share price fall also reflects some concern with the proposed terms of the de-merger: Under the deal structure, shareholders would be given stock in the new spinoff even though it will be listed in Australia and South Africa, but many U.K. shareholders have investment mandates which do not allow them to own overseas companies, so many will be forced to dump their shares in the spinoff.
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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