Dec. 20, 2015, 9:08 AM
- Brazil's state of Minas Gerais has frozen the Brazilian assets of BHP Billiton (NYSE:BHP) and Vale (NYSE:VALE) after determining their joint venture Samarco was unable to pay for damage caused by the bursting of a dam at its mine last month.
- The ruling comes as BHP steps up its hunt for acquisitions, hoping to take advantage of distressed prices at a low point in the commodity cycle, while increasing the likelihood it will make a dividend cut next year.
- Previously: BHP on review for downgrade at Moody's (Dec. 18 2015)
Dec. 18, 2015, 6:23 AM
- BHP Billiton's (NYSE:BHP) credit rating has been put on review for downgrade by Moody’s Investors Service, highlighting how the commodities rout is wreaking havoc on miners, even those with relatively strong balance sheets.
- "The review...reflects Moody's expectation that weak commodity prices will persist for the next several years, significantly reducing BHP Billiton's earnings and cash flow generation" said Matthew Moore, a senior credit officer.
- "As a result, we expect BHP Billiton's credit metrics to deteriorate beyond our expectations for the current rating, absent further countermeasures."
Dec. 15, 2015, 2:23 PM
- BHP Billiton (BHP +0.9%) is upgraded to Outperform from Neutral at Credit Suisse, which believes that BHP Billiton will be unable to sustain its $1.24 annual dividend and must cut it by half.
- Assuming a 50% dividend cut, BHP would be able to hold debt levels at ~$25B over the next two years amid what likely will be continuing weak commodity prices, the firm says.
- BHP has been able to protect the quality and value of its assets by ensuring “a consistent and sufficient” level of maintenance capex, the firm says, believing the company should follow the same approach to the balance sheet and the investment case by rebasing the dividend.
Dec. 11, 2015, 8:50 AM
- The partners in Australia’s largest oil and gas venture approve a $2B expansion in the North West Shelf project, its fourth major gas development in the past seven years.
- The Greater Western Flank Phase 2 off the northwest coast will develop 1.6T cf of gas from six fields, and begin production in H2 2019, according to project operator Woodside Petroleum (OTCPK:WOPEF, OTCPK:WOPEY).
- Six partners in the project hold equal 16.67% shares: In addition to Woodside, the partners are BP, Chevron (NYSE:CVX), BHP Billiton (NYSE:BHP), Royal Dutch Shell (RDS.A, RDS.B) and Japan Australia LNG, which is a joint venture between Mitsubishi and Mitsui.
Dec. 10, 2015, 6:54 PM
- Vale's (NYSE:VALE) debt is downgraded to Baa3 from Baa2 with a negative outlook by Moody's, citing expectation of weaker performance over the next 12-18 months due to declining iron ore and base metals prices, and that prices will not likely experience any meaningful recovery before 2017.
- The ratings agency says Vale has made substantial progress in reducing costs, and the increase in volumes and ore grades resulting from ongoing investments will help offset low commodity prices, but will not be fully reflected in the company’s credit metrics until 2017-18.
- Meanwhile, a Brazilian prosecutor files a civil action against Samarco and the joint venture owners Vale and BHP Billiton (NYSE:BHP) requesting 300M reais ($79M) for exclusive use in compensating and resettling victims affected by the Nov. 5 dam accident.
- Earlier: Petrobras debt downgraded deeper into junk at Moody's
Dec. 8, 2015, 6:55 PM
- The bill for last month's catastrophic Samarco dam failure in Brazil could be growing by the day, WSJ reports, as the joint venture between Vale (NYSE:VALE) and BHP Billiton (NYSE:BHP) struggles to formulate an emergency plan demanded by local prosecutors in case of additional accidents.
- Samarco is seeking an extension of a deadline from local prosecutors in producing an emergency plan for future accidents, citing the “extreme complexity” of the issues involved; on Nov. 28, a judge had granted a mere three days to fulfill the requirement or else pay a fine of 1M Brazilian reais/day (~$262.5K).
- Samarco's inability to formulate an emergency plan on time has added to concerns about the safety of its Germano and Santarém tailings dams, which were damaged when the nearby Fundão dam collapsed on Nov. 5, unleashing an avalanche of mud that killed at least 15 people, destroyed villages downstream, and polluted hundreds of miles of waterways in the Rio Doce basin.
Dec. 8, 2015, 9:15 AM
Dec. 8, 2015, 9:15 AM
- BHP Billiton (NYSE:BHP) -5.8% premarket, Rio Tinto (NYSE:RIO) -6.6% and Vale (NYSE:VALE) -7.7% as iron ore prices continue to drop - now at 10-year lows - and China’s exports fell for a fifth consecutive month while imports slumped for a record 13th straight month.
- Iron ore with 62% content delivered to Qingdao, China lost 1.1% to end Monday's trade at $38.65/ton; according to estimates from Capital Economics, iron ore prices in the $30-$39 range would threaten the profitability for the major iron ore suppliers.
- China's exports fell 6.8% Y/Y in dollar terms in November vs. a 6.9% decline in October and expectations of a 5.3% drop; November imports fell 8.7% Y/Y vs. an 18.8% decrease in October and expectations of an 11.8% drop.
- Also premarket: X -4%, MT -7.4%, CLF -4.4% premarket.
Dec. 7, 2015, 9:58 AM
- Anglo American (OTCPK:AAUKF, OTCPK:AAUKY) sinks to new all-time lows, falling to as low as £3.70 ($5.59) in London trading, the lowest since the company went public in 1999.
- Anglo is among the most diversified miners, with EBIT spread among iron ore and manganese (27%), coal (14%), copper (9%), diamonds (31%) and platinum (14%) in H1 2015, but the miner is being penalized for its diversity, as nearly all commodities have amid softening demand by China.
- "What you tend to find in most crises is that correlations [between commodities] move one way and everything craps out together," says Bernstein analyst Paul Gait, a former Anglo executive who still advises buying the company’s stock because of its large reserves of commodities such as copper.
- Mining giants BHP Billiton (NYSE:BHP) and Rio Tinto (NYSE:RIO) are far more exposed to a single commodity - iron ore - and have performed far better than their more diversified competitors; the companies have been able to weather the sharp drop in iron ore prices because their mines run at far lower costs than competitors, including Anglo.
- Earlier: Dow Jones: Anglo American to slash dividend, timing uncertain (Dec. 3)
Dec. 4, 2015, 9:55 AM
- Spot iron ore prices hit new 10-year lows below $40/metric ton in their steepest weekly decline in five months, as falling Chinese steel demand increases a global glut.
- More steel mills in China's Shanxi province have halted production due to shrinking demand and shortage of cash, industry consultancy Custeel says.
- Also, the recent steep fall in freight rates for key iron ore routes suggests that "any normal season pickup in restocking activity by Chinese buyers may have already come to an end," ANZ says.
- The top three global iron ore producers are lower: BHP -0.6%, RIO -1.1%, VALE -2.9%.
Dec. 3, 2015, 11:34 AM
- BHP Billiton (BHP -2%) CEO Andrew Mackenzie says he is long-term bearish on the outlook for commodity prices but remains bullish on demand growth based on the rise of Asian economies, Reuters reports.
- The CEO says the only way to compete in a world with ample capacity to meet the needs of countries such as China is to keep cutting costs, which means prices will keep coming down.
- BHP and the world's other top iron ore producers still expect Chinese steel production to peak at ~1B metric tons in the next decade, and Mackenzie questions forecasts by Chinese steel makers that production will stabilize at 500M-600M metric tons/year.
- "If China really wants to get along a path towards full development, it does have to get on with further construction of a number of things, including machinery and cars, and that will require more steel to be produced," the CEO says.
Dec. 1, 2015, 8:58 AM
- BHP Billiton (NYSE:BHP) says it plans to reduce copper production costs while increasing output of the metal, remaining optimistic about rising demand in the long term.
- Daniel Malchuk, BHP's copper chief, says the company will lower production costs to $1.08/lb. in FY 2017 from a projected $1.21/lb. in the year ending June 2016.
- Malchuk says that while near-term oversupply is weighing on current prices, attractive long-term fundamentals continue to support a positive outlook.
- Grade declines, falling investment across the sector, the lack of greenfield projects and expected demand growth in China are likely to constrain industry supply in the long term, Malchuk adds.
- BHP +1.2% premarket.
Dec. 1, 2015, 2:03 AM
- Brazil has officially filed a 20B Brazilian reais ($5.2B) lawsuit against mining companies BHP Billiton (NYSE:BHP) and Vale (NYSE:VALE) to clean up what it says was its worst ever environmental catastrophe.
- In a speech to the COP21 climate change summit in Paris, President Dilma Rousseff blamed the mine disaster on the "irresponsible action of a company" and said the firms would be "severely punished."
- Besides additional pressure from a global commodity rout, BHP's shares have fallen 20% since the dam burst on Nov. 5.
- Previously: BHP shares get crushed under mine lawsuit (Nov. 30 2015)
Nov. 30, 2015, 8:17 AM
- Iron ore futures in Singapore sank below $40/metric ton for the first time on concern that the economic slowdown in China will cut demand as supply continues to climb.
- "Prices are likely to continue taking it on the chin, trending into the $30s," says Axiom Capital's Gordon Johnson, citing lower Chinese demand and rising supply, including from the probable start of the $10B Roy Hill mine in Australia.
- Citigroup has forecast the mine’s new supply will contribute to a further slump, but the producer has said almost 90% of its output is under long-term contracts and that it will not pressure prices.
- BHP -4.6%, VALE -7.9%, RIO -0.6% premarket.
- Earlier: BHP shares get crushed under mine lawsuit
- Earlier: Brazil to file $5.3B suit against Vale, BHP over mining disaster (Nov. 27)
Nov. 30, 2015, 5:05 AM
- BHP Billition (NYSE:BHP) -6.6% premarket after Brazilian authorities threatened a 20B reais (roughly $5.2B) legal suit over the company's mine disaster in the south-eastern state of Minas Gerais.
- The amount comes on top of 250M reais ($66.2M) by Brazil's environmental agency for the dam burst, which covered the flood plain in mud for 80 kilometers as well as polluting a major river valley.
- BHP has also confirmed that the death toll from the disaster had risen to 13, with six people still unaccounted for.
- Previously: Brazil to file $5.3B suit against Vale, BHP over mining disaster (Nov. 27 2015)
- Previously: BHP sinks after UN dam spill accusations (Nov. 27 2015)
Nov. 27, 2015, 6:48 PM
- Brazilian officials say the government will file suit Monday against Vale (NYSE:VALE) and BHP Billiton (NYSE:BHP) and their joint venture Samarco for 20B reais ($5.3B) in response to this month's mining dam disaster.
- The Attorney General's office says the 20B reais is a preliminary figure and could be raised over the judicial process.
- The proceeds from the civil suit are intended to create a fund to help recovery efforts in the Rio Doce, the river that was contaminated with mud and mining waste in the wake of the Nov. 5 collapse of Samarco’s dam in Minas Gerais.
- The pending lawsuit would represent by far the biggest government response to the disaster.
- Earlier: BHP sinks after UN dam spill accusations
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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