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Nov. 10, 2015, 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.
Nov. 10, 2015, 11:57 AM
- Shares of BHP Billiton (BHP -0.7%) and Vale (VALE -1.1%) continue to drop but less rapidly than in recent days, slowing the slide which began Thursday with news of the dam failure at the Samarco iron ore mine in Brazil and prompted a four-day 10% drop in BHP and a 12% decline for Vale.
- Morgan Stanley implies that the worst may be over for BHP, as the firm says the market has effectively priced in a permanent closure of the Samarco mine as well as a large remediation cost; Samarco provides ~3.5% of revenue to BHP and is valued at $2.8B by Morgan Stanley.
- The firm thinks the damage to Vale may be bigge, jeopardizing as much as 9% of Vale’s total iron ore output from this month through Q2 2016.
Nov. 10, 2015, 8:59 AM
- Brazil's deadly mining disaster sparks rising skepticism about the future of the joint venture between BHP Billiton (NYSE:BHP) and Vale (NYSE:VALE), especially among Samarco’s creditors, Bloomberg reports.
- Investors are concerned a temporary suspension of Samarco’s license to operate in the area may become permanent, dealing a potentially fatal blow to the company; the company's $2.2B of notes now trade at $0.56 on the dollar.
- Samarco, which has operated for almost four decades and employees ~3K people, was one of Brazil’s 10 top exporters last year.
Nov. 10, 2015, 2:47 AM
- Investors continued to dump shares in BHP Billiton (NYSE:BHP) and Vale (NYSE:VALE) on Monday after last week's deadly dam breach at its jointly owned iron-ore mine in Brazil.
- The cost to the companies, including for cleanup and rebuilding, could top $1B, said Deutsche Bank's Paul Young, who estimates the mine could be closed until about 2019.
- Iron ore output will also be cut from two nearby mines - Vale's Fabrica Nova and Timbopeba - by 3M tonnes in 2015 and by 9M tonnes in 2016.
- Previously: BHP shares hit seven-year low following Brazil dam disaster (Nov. 09 2015)
Nov. 9, 2015, 10:56 AM
- Iron ore prices likely will hold near $50/metric ton by year-end rather than tumble to $40, as prices may be helped by the Brazilian supply disruption at the BHP Billiton (BHP -2.3%) venture with Vale (VALE -1.8%), Citigroup says.
- The loss of 25M-30M tons/year of supply from the Samarco JV will coincide with cuts in Chinese production, lifting prices of pellets and lumps, but prices may resume their decline to below $40 when sizable cuts to China’s steel output occur next year after the Lunar New Year, Citi says in a new report.
- Samarco, which accounts for more than 20% of global pellet exports, produced 25M tons last year, mostly pellets, Citi estimates.
- Also: RIO +0.3%, CLF +1.6%.
Nov. 9, 2015, 8:18 AM
- BHP Billiton (NYSE:BHP) -5.6% on the Australian stock exchange to its lowest since the global financial crisis in 2008 after saying it might cut its iron ore output in the wake of the Brazilian dam disaster which has left up to two people dead and dozens still missing.
- BHP says the Samarco company it owns together with Brazil's Vale (NYSE:VALE) is responsible for the "entirety" of operations at the mine where a deadly dam break last week unleashed several million cubic feet of water and mineral waste.
- The cost to the companies, including for cleanup and rebuilding, could top US$1B, says Deutsche Bank's Paul Young, who estimates the mine could be closed until about 2019.
- BHP says CEO Andrew Mackenzie and the head of its iron ore business, Jimmy Wilson, are going to Brazil to assist Samarco, Vale and local authorities.
Nov. 6, 2015, 8:29 AM
- BHP Billiton (NYSE:BHP) -5.3% premarket and -5.7% in London as investors worried about the damage to a Brazilian iron ore operation it jointly owns caused by a major dam burst.
- At least 17 people reportedly have died, with more than 30 injured and dozens missing, after a tailings dam at an iron ore mine in the Minas Gerais region of Brazil burst and devastated a nearby rural village with mudslides.
- Samarco Mineração, the JV between BHP and Vale (NYSE:VALE), says it has not established what had caused the dam to burst; Vale -3.2% premarket.
- The incident is shaping up as the most deadly incident in BHP's long history in mining and a "devastating stain" on the company's international reputation.
Nov. 5, 2015, 4:53 PM
- An iron ore tailings dam owned by a joint venture between BHP Billiton (NYSE:BHP) and Vale (NYSE:VALE) burst in southeast Brazil today, flooding a valley and devastating a rural community, Bloomberg reports.
- A local hospital confirms one death, while a mining workers union claims at least 15 fatalities
- The extent of damage is sure to place a spotlight on an operation that produced 25M metric tons of iron ore pellets last year; an extended stoppage would help reduce a global iron ore glut that has pushed down prices by 32% YTD.
Oct. 29, 2015, 10:39 AM
- Iron ore prices tumble below $50/metric ton, sinking to their lowest levels since July, as concerns resurface about demand from the world’s No. 1 steelmaker, China.
- China's steel demand is weakening at "unprecedented speed" and nationwide output may eventually slump 20%, according to a recent outlook by Boasteel chairman Xu Lejiang.
- According to WSJ, traders and analysts believe fears are intensifying again on the supply side as well, as Australia-based miners such as Rio Tinto (RIO -1.7%) and BHP Billiton (BHP -2.6%) continue to pump out record amounts of iron ore.
- A surge in low-cost supply likely will further push prices lower towards the end of the year and next, Goldman's Katie Hudson tells the Australian Financial Review, saying "the major producers are adding incremental volume at around $US20 a ton, that gives you a sense of where the vulnerability is."
- Last week, top producer Vale (VALE -2.1%) announced record Q3 shipments of 88M metric tons despite idling 13M metric tons worth of high cost operations, and the miner said it had reduced cash costs to an industry-leading $12.70/metric ton.
Oct. 23, 2015, 11:45 AM
- Iron ore shows signs of buckling again, as prices slump to their lowest level in three months as the top producers announce supply increases, Bloomberg reports.
- Rio Tinto (RIO +1.3%), BHP Billiton (BHP +1.3%) and Vale (VALE +0.8%), the three largest suppliers, all announced increases in quarterly production this month, and today China’s central bank cut benchmark rates and banks’ reserve requirements as data showed crude steel output contracted.
- BHP said this week its iron ore output jumped 7% to 61.3M in Q3, Vale said it produced a record 88.2M tons in the quarter, and Rio earlier had reported Q3 output rose 12%.
- Ore delivered to Qingdao fell 1.1% to $51.62/dry ton, losing 4% this week and falling to the lowest since July 24, having dropped for five of the past six weeks.
Oct. 22, 2015, 8:43 AM
- BHP Billiton (NYSE:BHP) may consider taking on debt in the short run to ensure its ability to continue to increase dividend payouts each year but not to the extent of compromising its finances, Chairman Jac Nasser tells investors at its annual shareholders meeting.
- Nasser declines to say whether BHP is borrowing now to pay its dividend, but he says the payout for FY 2015 that ended June 30 was covered by earnings.
- Nasser says BHP's balance sheet is strong and that the company remains committed to a solid A credit rating.
- Andrew Mackenzie touts cost cuts at the meeting, saying BHP's average unit costs have dropped more than 30% from the peak; he says annual capex costs have been cut by 24% to US$11B and will be reduced further to US$8.5B in the current fiscal year.
- BHP +1.9% premarket.
Oct. 20, 2015, 7:08 PM
- BHP Billiton (NYSE:BHP) says FQ1 iron ore production rose 7% to 61.3M metric tons, meeting analyst estimates and remaining on track to meet full-year guidance of 247M metric tons.
- BHP says it will cut capital spending in its petroleum division to $2.9B, $200M less than prior guidance, as oil and gas production for the quarter fell 4% Y/Y to 64.5M boe while the company maintains its target of 237M boe for the full year.
- FQ1 production of met and thermal coal were both flat Y/Y at a respective 10.4M and 9.8M tons, while copper output slipped 3% Y/Y and 13% Q/Q to 377K tons.
- BHP also says it received approval to extend operational permits to 2023 at its Cerro Colorado copper mine in Chile.
Oct. 19, 2015, 5:27 PM
- Rio Tinto (NYSE:RIO) has rolled out fully automated driverless truck fleets at two of its iron ore mines in the Pilbara in Western Australia, and is testing driverless trains and autonomous drills in the region as it seeks new technologies to cut costs and improve safety, Financial Times reports.
- "Our autonomous fleet outperforms the named fleet by an average of 12%, primarily by eliminating required breaks, absenteeism and shift changes," says top Rio iron ore exec Andrew Harding.
- Harding says automating the fleet improves utilization, which allows Rio to reduce its fleet size and cut capex costs.
- BHP Billiton (NYSE:BHP) and Fortescue Metals (OTCQX:FSUMF) are testing and deploying driverless trucks in the Pilbara, but FT says Rio is the most advanced with its rollout of the autonomous technology.
Oct. 14, 2015, 5:53 PM
- The 14 companies that issued a joint statement today endorsing an international agreement to reduce carbon emissions included leaders of some of the world’s most carbon-intensive industries: coal miners BHP Billiton (NYSE:BHP) and Rio Tinto (NYSE:RIO), oil majors Shell (RDS.A, RDS.B) and BP, aluminum producer Alcoa (NYSE:AA) and cement maker LarfargeHolcim (OTCPK:HCMLF).
- A climate deal could eventually mean new taxes and regulations on products central to the companies’ business models, but the companies say they seek clear direction from world leaders to guide long-term investments and transparency to ensure all countries apply the same rules to emissions.
- While UN climate talks scheduled for December in Paris are not likely to result in a global price on carbon, individual countries are submitting their own plans that could lead to market opportunities for major players.
- The statement was also joined by Alstom (OTCPK:ALSMY, OTCPK:AOMFF), Calpine (NYSE:CPN), Hewlett-Packard (NYSE:HPQ), Intel (NASDAQ:INTC), National Grid (NYSE:NGG), PG&E (NYSE:PCG), Schneider Electric (OTCPK:SBGSF) and Siemens (OTCPK:SIEGY).
Oct. 14, 2015, 5:15 PM
- BHP Billiton (NYSE:BHP) is close to selling ~$6.5B in corporate hybrid bonds after launching an offering today, WSJ reports.
- BHP reportedly received more than $14B of orders for the debt, in what was seen as a sign of strong demand; the mining company originally had looked to sell ~$3B in dollar hybrid bonds plus bonds denominated in euros and sterling.
- The demand for the offering means BHP was able to lower the yield it had planned to offer; the final yield offered on a 60-year euro-denominated bond, which can be retired after nine years, was set at 5.625% after originally offering a yield of 5.875%.
- BHP, the world’s largest miner, is viewed as one of the most creditworthy companies in a beleaguered sector, tempting investors to bet on a relatively rare new mining bond as they hunt for returns in a world in which base interest rates remain near zero in many countries.
Oct. 14, 2015, 12:59 PM
- BHP Billiton (BHP +1%) reiterates it has no plans to cut production because its operations generate cash, and says a series of recent mine closures will not cause higher commodity prices, Financial Times reports, quoting BHP's head of marketing.
- Arnold Balhuizen says closing or cutting production from unprofitable mines would not lead to higher prices, even after rival Glencore recently said it would cut its zinc output by a third and sparked a broad-based rally in metal prices and mining shares.
- Balhuizen’s views on production cuts are shared by some analysts, including Goldman Sachs, which has cited the example of iron ore where ~200M metric tons of capacity have been reduced in the past two years yet prices have plunged to $50/ton from $140; BHP is one of the world’s biggest producers of the steelmaking ingredient.
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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