Aug. 20, 2013, 2:35 PM
- BHP's (BHP -1.4%) decision to continue to invest in its massive Jansen potash development in Saskatchewan "add[s] salt to the wound" of potash supply, Scotiabank says, pointing out Jansen could add the equivalent of 18%-20% of the potash market over recent years.
- Jansen’s extra product might come online well after potash prices have already decreased materially, BMO Capital says, but "still, there is only so much incremental potash demand to chase incremental supply."
- POT +0.3%, MOS +0.1%, AGU +0.9%, IPI +1.4%.
Aug. 20, 2013, 10:30 AM
- The latest results for Glencore (GLCNF.PK -1.9%) and BHP (BHP -0.8%) show the good times are over for global miners (I, II), but the outlook is more difficult at Glencore, Andrew Peaple writes.
- Glencore's trading business performed reasonably well in H1 with operating profit up 6.4% despite tough markets, but trading is a low-margin business where it faces tighter regulatory scrutiny amid stiff competition.
- Even excluding the $7.7B writedown from the Xstrata merger, Glencore's EBITDA was down 9% in H1, vs. a 1% gain at BHP over the same period.
- Glencore's outspoken Ivan Glasenberg has criticized peers for wasteful investment and not taming supply growth, but "it is time the physician healed himself," Peaple writes.
Aug. 20, 2013, 8:40 AM
- SocGen sees BHP Billiton's (BHP) FY 2013 results as a net negative, particularly plans to invest $2.6B during the next four years digging shafts at the Jansen potash project; most market participants believe the project is likely to be NPV destructive.
- CEO Andrew Mackenzie: ""The whole basis of the strategy.. is that we want to retain complete flexibility to enter the [potash] market at a timing which we think is right to maximize returns for our sharheolders."
- SocGen continues bearish on BHP shares; if investors were to invest 26% of their portfolio in COP and the remaining 74% in RIO, the firm says they can replicate the commodity mix and asset quality of BHP but pay a 30% lower P/E and receive a 10% higher dividend yield.
- Shares -0.8% premarket.
Aug. 20, 2013, 3:30 AM
- BHP Billiton (BHP) FY profit before items $11.8B vs $17.2B and consensus of $12.7B.
- Revenue $65.97B vs $72.23B.
- Net profit -30% to $10.9B.
- EPS $2.037 vs $2.884
- Pretax profit $17.87B vs $23.02B last year.
- Profit hurt by exceptional items of 922M and a temporarily increased tax rate, while emerging economies experienced lower-than-expected growth in H2.
- Ups final dividend by $0.02 to $0.59, slightly below forecasts for $0.60.
- BHP to cut capex by 26% in 2014 to $16.2B.
- Plans to invest $2.6B in digging shafts and installing infrastructure at its Jansen potash project in Canada over the next few years. However, BHP didn't provide a timetable for when output would begin. The miner could sell stake to partners.
- Shares -3.2% in London. (PR)
Aug. 19, 2013, 10:18 AM
- Acquisitions of North American oil and gas assets in H1 have slumped to their lowest since 2004, as energy companies turn instead to developing current projects as they can't justify buying more property while fields bought during the 2009-12 shale land grab remain below their purchase price.
- The spending slowdown by global firms such as BHP and Shell (RDS.A, RDS.B) comes amid a series of writedowns of oil and gas shale assets, caused by plunging prices and disappointing wells.
- The deal-making slump, which may last for years, threatens to slow oil and gas production growth as companies that built up debt during the shale rush can’t depend on asset sales to fund drilling programs.
Aug. 15, 2013, 7:20 PM
- BHP Billiton (BHP) says the SEC and Department of Justice are stepping up an investigation into potential breaches of anti-corruption laws, including BHP's sponsorship of the 2008 Summer Olympics in China, that could lead to unspecified enforcement actions.
- BHP says an internal investigation launched several years ago found evidence regarding possible bribery of foreign government officials.
Aug. 15, 2013, 1:51 PM
- Workers began a surprise strike today at Chile's Escondida copper mine - the world's largest - to demand improved working conditions and pay; the work stoppage is planned to last 24 hours, but the miners union says the timeframe is being evaluated.
- BHP Billiton (BHP +0.4%) and Rio Tinto (RIO -1.2%) each own 30% of Escondida, which produces ~20% of Chile's annual copper output; workers at BHP's Spence and Cerro Colorado mines also joined the labor action.
Aug. 9, 2013, 2:59 PM| 2 Comments
Aug. 8, 2013, 10:29 AM
- Reports of China's record-high imports of iron ore suggest worries about its future economic health and the impact on international mining companies may be overblown. (also)
- "If you think in terms of strength in [overall] imports and strength in [iron ore and steel] prices, you can conclude [Chinese] steel demand is quite strong,” Macquarie says.
- Iron ore prices have rallied in recent weeks as China has restocked supplies and increased steel output; although down ~9% YTD and well off 2011 highs, the index price for iron ore hit a three-month high $133.10/ton yesterday.
- "As long as the developing world is continuing to urbanize and industrialize, our iron ore is going to be needed," Rio Tinto's (RIO +1.2%) Sam Walsh says.
- CLF +4.5%, MT +4.3%, FCX +3%, BHP +3%, X +2.2%, VALE +1.6%.
Aug. 7, 2013, 9:13 AM
- More from BHP CEO Andrew Mackenzie: BHP hasn't ruled out building the $14B Jansen potash mine in Canada, he tells WSJ, with prep work continuing even after the recent collapse of a producer cartel threatens to drive down potash prices. (earlier)
- BAML analysts this week said the proposed mine "works" at prices above $400/ton but would struggle to generate a suitable return at $300.
- Mackenzie says he remains optimistic about future demand for commodities in China despite a wobbly economy, with consumption-driven growth there to ensure strong demand for commodities such as gas, copper and potash.
- Shares -0.6% premarket.
Aug. 7, 2013, 4:27 AM
- BHP Billiton (BHP) CEO Andrew Mackenzie has shrugged off the exit of Uralkali (URALL.PK) from one of world's two main potash cartels, saying that the latter's action was a short-term event while his company takes a long-term view.
- "We've always said that potash is a business which will lose some of its cartel-like structure and become in time globally traded like everything else," Mackenzie said.
- BHP will say more about potash when it presents its results on August 20.
- There were rumors yesterday that Uralkali could re-form the cartel.
Aug. 6, 2013, 10:31 AM
- BAML urges BHP Billiton (BHP) to make a bold response to the implosion of one of the world’s two big potash cartels: Buy an established potash producer such as Mosaic (MOS) as an alternative to building the Jansen mine in Saskatchewan.
- Jansen could eventually produce as much as 10M tons/year of potash, but likely will cost ~$15B to build. BAML says that’s on a par with its enterprise value of MOS, which could produce up to 12M tons/year; MOS also has a phosphate business worth as much as $8B that could be sold.
- "Mosaic could provide instant critical scale via a large scale, low-cost, long-life asset," the firm says. (earlier)
Aug. 5, 2013, 3:42 PM
- Potash (POT +2%) shares enjoy solid gains following remarks by Russian producer Uralkali’s CEO that consolidation would be a logical step for the sector when potash prices fall to a level of marginal producers, though it's too early to predict possible deals as the valuation of individual companies is now unclear.
- Mosaic (MOS +1.2%) also is higher amid rumors it might be a takeover target for BHP Billiton (BHP +0.3%).
- Agrium (AGU -0.5%) is left out of the gainers after shares are downgraded at Stifel Nicolaus.
Aug. 4, 2013, 4:29 AM
- Australian Prime Minister Kevin Rudd has called a general election for September 7, saying the poll will be about who can best lead the country "through the difficult new economic challenges which now lie ahead."
- Rudd's Labor Party has reduced the lead of the right-of-center Liberal Party since Rudd deposed Julia Gillard as PM six weeks ago in an internal Labor coup.
- The Liberals, led by Tony Abbott, have vowed to scrap mining and carbon taxes if they win the ballot, policies that would affect the likes of BHP (BHP), Rio Tinto (RIO), Peabody Energy (BTU), Vale (VALE), and Glencore (GLCNF.PK).
- Relevant country ETFs include: Stocks - EWA, EWAS, KROO, AUSE, FAUS. Bonds - AUD, AUNZ; Forex - FXA, GDAY, CROC
Jul. 31, 2013, 11:48 AM
- Analysts widely expect the expected potash price war will bring an end to BHP’s $14B Jansen potash development project in Saskatchewan, but WSJ's Robb Stewart says maybe not.
- BHP has never wanted to join a cartel, Stewart writes, preferring open market pricing like it was instrumental in driving for iron ore; had BHP succeeded with its 2010 bid for Potash (POT), it was planning to market its potash outside the Canpotex cartel.
- The easiest choice for BHP may be to keep Jansen simmering in the background while working on getting the numbers for the project to add up and the potash industry adapts to the possible early arrival of market-based pricing.
Jul. 31, 2013, 7:58 AM
- BHP Billiton (BHP) decides against selling its struggling Gregory Crinum coal mining operation in eastern Australia, saying recent operational improvements at the underground mine support continued operations.
- BHP and Mitsubishi, which jointly own several coking coal mines in Queensland, in October closed the unprofitable Gregory open-cut mine, and has since closed the Norwich Park mine.
- BHP says coal remains one of its core commodities even though investment will increasingly be directed toward U.S. shale oil production and iron ore mines in Western Australia.
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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