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BHP Billiton Limited (BHP)

  • Nov. 18, 2013, 11:40 AM
    • Freeport McMoRan (FCX) has agreed to pay nearly a third more in annual processing charges to China's leading copper smelters, likely increasing the pressure on rival BHP to raise its own offer on the charges, Reuters reports.
    • China's top copper producer reportedly agreed with FCX to treatment and refining charges of $92/metric ton and $0.092/lb. for term copper concentrate shipments in 2014, setting the benchmark for the region, vs. $70/metric ton and $0.07/lb. charged by the smelters from Freeport this year.
    • BHP, whose opening offer of $80 and $0.08 offer to Chinese smelters last week now looks low, is meeting the smelters for a second round of talks this week.
    • ETFs: JJC, CPER, CUPM.
  • Nov. 14, 2013, 7:56 AM
    • Rio Tinto (RIO) expects to submit a mine plan to U.S. authorities this week for development of its $6B Resolution project in Arizona, one of the world's largest undeveloped copper deposits.
    • The project, 55% owned by Rio and 45% by BHP Billiton (BHP), could produce ~500K metric tons/year of copper at its peak; output at that level is enough to meet one-quarter of annual U.S. copper demand, and Rio estimates the resource could last for more than four decades.
    • Development of the mine hinges on a land swap with the U.S. government first proposed by Resolution eight years ago, but the deal has yet to win approval from Congress due to opposition from environmental and native American groups.
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  • Nov. 11, 2013, 12:24 PM
    • JPMorgan Cazenove’s equity strategy team is recommending investors short big mining stocks, while its mining analysts defend some individual stocks, including BHP Billiton (BHP), Rio Tinto (RIO) and Glencore Xstrata (GLCNF, GLNCY).
    • The strategists say past bear market rallies in the sector tended to last 4-5 months and deliver 30%-35% upside and that's where we are now, and miners typically show a strong correlation to the relative performance of emerging market stocks and Chinese stocks; after a brief rebounds, emerging markets and Chinese stocks have rolled over.
    • The metals and mining team says its firmly held belief remains intact that diversified miners’ medium-term free cash flow improvement and de-leveraging is undervalued, though a short-term correction is possible.
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  • Nov. 1, 2013, 8:20 AM
    • BHP Billiton (BHP) agrees to sell a coal mine in New Mexico to the Navajo Nation for ~$85M, part of the miner's ongoing efforts to drive down costs and exit smaller operations around the world.
    • The mine on Navajo land has supplied fuel to the Four Corners Power Plant for 50 years, generating ~$40M in revenue for the Navajo Nation in 2011; the plant supplies power to New Mexico, Arizona, California and Texas.
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  • Oct. 24, 2013, 2:59 PM
    • BHP Billiton (BHP +0.7%) is still in talks to sell its 41% stake in the iron ore-rich Mount Nimba deposit in Guinean to Brazilian mining venture B&A Mineracao, CEO Andrew Mackenzie tells shareholders at its annual meeting.
    • BHP expressed interest during previous management in exiting West Africa in order to focus on operations elsewhere; Mackenzie, who took over BHP earlier this year, says the company still could develop Mount Nimba but it has more than enough resources in the Pilbara region of Western Australia to meet customer demand.
    • Earlier from its shareholder meeting: BHP expects commodities demand to rise 75% in 15 years.
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  • Oct. 24, 2013, 12:45 PM
    • BHP Billiton (BHP +0.7%) CEO Andrew MacKenzie expects global commodities demand to grow 75% over the next 15 years driven in part by continued urbanization in emerging economies.
    • Speaking at BHP's annual general meeting, MacKenzie says "we are already seeing signs of recovery in the global economy" after a challenging year due to slower global economic growth and weaker commodity prices.
    • Chairman Jac Nasser says BHP is seeing moderate growth rates in the U.S. economy while conditions in Europe remain challenging; in China, economic growth is expected to rise 7% next year, a bit lower than Q3's 7.8% but Nasser still expects demand levels for commodities to continue to rise as people continue to migrate from the countryside to cities.
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  • Oct. 23, 2013, 4:45 PM
    • Oil and gas production begins at ExxonMobil’s (XOM) A$4.5B Kipper-Tuna-Turrum project offshore eastern Australia.
    • The Turrum field holds ~110M bbl of oil and 1T cf of gas and is due on stream next year, while Kipper holds ~620B cf of gas and 30M bbl of condensate and will not be brought on stream until 2016.
    • Production from the three fields will help maintain gas production levels from the Bass Strait region, which has now been on stream for more than 40 years.
    • The Turrum and Tuna fields are owned by a 50-50 joint venture of XOM and BHP Billiton (BHP); Kipper participants include operator XOM with 32.5% and BHP with 32.5%
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  • Oct. 22, 2013, 3:28 PM
    • BHP Billiton (BHP +3.1%) plans to sell ~250K net acres in the Permian Basin in Texas and New Mexico, roughly half its oil and gas acreage there, to focus on its most lucrative assets there, Reuters reports.
    • It's not clear how much BHP can hope to reap from the sale, as prices within the Permian have varied widely, depending on location, infrastructure and quality; part of Chesapeake's sale of Permian assets a year ago September implied a price of ~$3,100/acre, which would imply a value of nearly $800M for what BHP is selling.
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  • Oct. 21, 2013, 6:31 PM
    • BHP Billiton (BHP) posts a 23% Y/Y rise in iron ore output during its September quarter and says copper and petroleum production also rose, part of a strategy to capture more of a slower-growing market for raw materials.
    • Iron ore production benefited from major expansion work underway in Australia that will lift FY 2014 output to 212M metric tons, up from a previous target of 207M, according to the company.
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  • Oct. 21, 2013, 7:58 AM
    • BHP Billiton (BHP) plans to pull out of a series of Indian oil and gas explorations projects after being hit by regulatory delays in the country.
    • The decision leaves BHP with an interest in just one Indian exploration block, which it says it will continue to develop with BG Group (BRGYY, BRGXF).
    • The pullout makes BHP the latest large global company to scale back or end their operations in India because of of bureaucratic delays or disagreements with the government; earlier this month, Wal-Mart pulled out of its Indian joint venture, complaining about overly restrictive regulations on foreign investment.
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  • 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.
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  • 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%.
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  • 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.
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Company Description
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.