Oct. 15, 2013, 3:39 PM
- Rio Tinto's (RIO +2.9%) announcement that iron ore production had hit a record level is boosting other iron mining stocks: CLF +4.4%, VALE +1%, BHP +0.3%.
- RIO and the other miners no doubt also are enjoying a boost from a resurgent China, where iron ore prices have rebounded 21% to $133.60/ton from a late-May low; China's iron ore imports in September totaled a record 74.6M metric tons, up 15% Y/Y.
Oct. 11, 2013, 6:11 PM
- BHP Billition (BHP) underpaid royalties in Colombia by listing items such as jewelry and entertainment among production costs, according to the preliminary findings of a government audit.
- By its unusual expense claims, BHP’s Cerro Matoso ferronickel mine underpaid 62B pesos ($33M) in taxes between 1998 and 2003 when adjusted to today’s prices, the government says.
- The audit comes as BHP seeks to expand the world’s second biggest ferronickel mine and faces community protests over alleged pollution.
Oct. 4, 2013, 11:29 AM
- Vale (VALE -1%) is tagged with a Sell rating and $13 price target at Barclays, which cites overexposure to iron ore prices.
- 92% of Vale’s earnings, or 77% of its net present value, comes from iron ore; a 10% change in the iron ore price would reduce Vale’s NPV by 49% and 2014 earnings by 32%, according to Barclays.
- The firm's price profile assumes iron ore $105/ton in 2014 retreating to $90/ton by 2016, resulting in Vale’s earnings falling 51% by 2016 vs. 2013.
- Barclays ranks Vale near the bottom of global peers BHP, RIO and Anglo American (AAUKY.PK, AAUKF.PK) on all key metrics including production growth, free cash flow generation, earnings growth, gearing, return on equity and return on invested capital.
Sep. 30, 2013, 8:28 AM
- Rio Tinto (RIO) has received three bids for its majority stake in the Clermont mine in Australia's Queensland state, but all three fell short of expectations, WSJ reports.
- Rio is cutting costs and seeking to sell assets including coal stakes in Australia and Mozambique and an iron ore mine in Canada, but coal assets have been hard to sell due to easing demand from China, which has resulted in a slump in coal prices.
- Clermont is one of Rio's newest and largest coal operations; it was opened in 2010 and will supply up to 165M tons of thermal coal in its expected 16-year lifetime.
- RIO -2.7% premarket, as mining firms are under pressure after economic data from China came in weaker than expected: VALE -2.2%, BHP -1.4%, FCX -0.9%.
Sep. 28, 2013, 9:00 AM
- Deep-value investor Daniel Khoshaba's KSA Capital Partners (now renamed KSA MidOcean) has delivered an annual return of 10.1% after fees since inception in 2004 - trouncing its competition and the S&P 500. He walked between raindrops in 2008, gaining 3.6% while the S&P lost 37%, but just 27% long exposure to the market this year has the fund lagging by nearly 5%. Three current favorites are Owens-Illinois (OI), Dana Holding (DAN), and Pinnacle Entertainment (PNK).
- The world's largest maker of glass containers, Owens is in the sweet spot of being able to raise prices. With the extra cash, it's paying down debt and eventually will begin buying back stock.
- Despite nearly doubling in the past 2 years, auto-parts maker Dana still trades at just 4x free cash flow and far below Khoshaba's price target of $38. The company recently announced plans to buy back about 30% of its stock.
- A newish holding, Pinnacle was added to the portfolio after agreeing to buy rival casino Ameristar. The cost savings should allow Pinnacle to generate a 15% free-cash-flow yield in 2014 - well above Khoshaba's threshold of 10%. His price target is $40.
- While not disclosing whether he's covered successful shorts in Timken (TKR) and Caterpillar (CAT), Khoshaba recently told investors recovery is unlikely for the companies because they depend on commodities where "production far outstrips demand." He's short BHP Billiton (BHP, BBL) for similar reasons.
Sep. 20, 2013, 11:41 AM
- BHP Billiton (BHP -1%) and minority partner Apache (APA -0.2%) say they have started their $1.5B Macedon natural gas project in western Australia.
- The development began operating last month and has production capacity of 200 terajoules/day.
- APA says it plans to invest ~$1.9B overall in Australia this year, including the Coniston and Balnaves oil projects and the Julimar development.
Sep. 20, 2013, 9:42 AM
- A senior executive of the world’s largest aluminum producer, Russia’s Rusal, says 40% of global aluminum production is unsustainable at current prices, which may not bode well for Alcoa's (AA -0.9%) Q3 results when they're announced early next month.
- Global aluminum supply exceeded demand in the first seven months of this year by 773K metric tons, while the surplus in all of 2012 was 506K; BHP, RIO and CENX all have increased production significantly YTD.
- Alcoa managed to lower its costs by $64/metric ton in Q2 but its realized price fell by $92/metric ton, and there's no reason to believe prices have gone anywhere but down in Q3, Paul Ausick writes.
- ETF: JJU.
Sep. 15, 2013, 3:22 AM
- The SEC is pushing energy companies to disclose how much of their liquid reserves comprise fuel that is not derived from crude oil but from natural gas, such as the less valuable propane.
- BHP (BHP) and ConocoPhillips (COP) are among the companies to have recently agreed to the SEC's request, joining the likes of Exxon Mobil (XOM) and Anadarko Petroleum (APC).
- The matter has become quite important, because while crude is worth $100 a barrel, the prices of other fuels have dropped along with that of natural gas.
- Other companies to have been contacted by the SEC over the issue include Chevron (CVX) and Marathon Oil (MRO).
Sep. 13, 2013, 8:57 AM
- The Arizona Corporation Commission drops its consideration of deregulating the state’s retail electricity market, a move that clears uncertainty surrounding two energy projects in neighboring New Mexico.
- Arizona Public Service Co. cited uncertainty from potential deregulation when it delayed a plan to buy Southern California Edison’s (EIX) portion of the coal-fired Four Corners Power Plant near Farmington, N.M.
- Also, the Navajo Nation says it now can pursue a plan to buy a coal mine from BHP Billiton (BHP) that feeds the Four Corners plant.
Sep. 9, 2013, 9:49 AM
- J. P. Morgan comes away bullish from its meeting with Vale’s (VALE +2%) top management, assigning a $25 price target, as it sees Vale's savings from cost-cutting are permanent and "present a great source of value generation."
- Vale so far has realized $1.6B in cost savings during H1, and while the company doesn't have an official savings target, it expects year-end 2013 to finish at more than double H1.
- Serra Sul S11D is Vale’s main project and J.P. Morgan thinks another $2B can be delivered from proper execution.
- Vale is more bullish than analysts on iron ore prices, expecting them to stay above $110/ton in the medium to long-term; J.P. Morgan thinks that’s too bullish but believes a long-term price below $100/ton is too conservative.
- No doubt helping boost Vale shares is strong China trade data; also RIO +2.2%, BHP +0.8%, CLF +1%.
Sep. 8, 2013, 10:14 PM
- The ASX 200 (EWA) gains 0.3% and the aussie (FXA) is little-changed following the booting of the Labor party from power.
- A check of the miners amid new PM Tony Abbot's promise to repeal an unpopular carbon tax finds Rio Tinto (RIO) ahead by 0.35% and BHP Billiton (BHP, BBL) +1% in Sydney action.
- ETFs: EWAS, KROO, AUSE, FAUS, AUD, AUNZ, GDAY, CROC
Sep. 7, 2013, 6:55 PM
- "The sectors that benefit the most would be the materials, particularly mining stocks," one economist said Thursday, regarding the prospect of a Tony Abbott victory in Australia.
- Abbott did indeed emerge victorious and will become the country's 27th prime minister after being sworn in next week.
- Of particular note is Abbott's promise to repeal a mining tax, a move expected to benefit Rio Tinto (RIO) and BHP Billiton (BHP). Also on watch: Newcrest Mining (NCMGF.PK)
- ETFs - Stocks: EWA, EWAS, KROO, AUSE, FAUS Bonds: AUD, AUNZ Currency: FXA, GDAY, CROC
Sep. 4, 2013, 9:59 AM
- The world's biggest miners are set to spend ~$244B on expansions to 2015 - just 2.4% less than the $250B in capex in the previous three-year period, Bloomberg calculates - failing to heed Glencore CEO Ivan Glasenberg’s call for austerity to end an oversupply in mineral markets.
- BHP Billiton (BHP) last month decided to proceed with a $2.6B investment in the Jansen Canadian potash project, which may end up costing $15B, and Rio Tinto (RIO) is planning a ~$5B expansion in Australia.
- "There has been a push for more efficient use of capital, which doesn’t necessarily mean you shouldn’t develop projects,” says a director at Arnhem Investment.
Aug. 26, 2013, 10:28 AM
- BHP CEO Andrew Mackenzie reiterates plans for the Jansen Canadian potash project, driven by expectations of strong investor returns in later decades.
- "We have the best undeveloped greenfield mine on offer to the world... we will be prepared to respond very quickly to the market when it’s needed," Mackenzie says in an Australian interview; potential partners are in "a wider range than just some of our mining peers that would be interested in a project like this."
- BlackRock's Evy Hambro has called the project "misguided," but Mackenzie spins it differently: Hambro says he "can see the value of [Jansen] in the long term, as long as we don’t spend too much on it right now."
Aug. 26, 2013, 7:57 AM
- The shakeup continues at BHP Billiton (BHP), as former ferrous and coal division chief executive Marcus Randolph will retire next week.
- Randolph already was on leave when newly-hired CEO Andrew Mackenzie stripped out a layer of top management and named a new team to help him run the company.
- He was one of four execs seen as possible successors to Marius Kloppers until Mackenzie's appointment in February.
Aug. 23, 2013, 8:25 AM
- In a "more modest approach to remuneration befitting the times," BHP Billiton (BHP) slashes executive pay just days after reporting a second consecutive drop in annual profit.
- New CEO Andrew Mackenzie won't receive 50K BHP shares worth ~$6.2M due to him as part of a bonus for being lured away from rival Rio Tinto.
- The board also cut by 35% the number of shares paid as part of a 2008 long-term incentive plan for execs, including Mackenzie who was boss of BHP's nonferrous metals division at the time.
BHP vs. ETF Alternatives
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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