Oct. 6, 2014, 10:14 AM
- Glencore (OTCPK:GLCNF, OTCPK:GLNCY) CEO Ivan Glasenberg criticizes rival miner BHP Billiton (BHP +1.2%), claiming the latter company's plans to further expand iron ore output will hurt the development of one of Africa’s poorest areas.
- Glasenberg says the huge amount of iron ore being produced by the world’s three biggest miners - Vale, Rio Tinto and BHP, already is impacting prices and that further expanding output, as BHP said today it intends to do, would make investing in African iron ore a less appealing prospect.
- Iron ore prices have plunged 40%-plus this year to below $80/ton, their lowest level since 2009, exacerbated by the top iron ore miners ramping up production in the hope they can profit from economies of scale.
Oct. 6, 2014, 2:43 AM
- BHP Billiton (NYSE:BHP) plans to raise its iron-ore capacity by nearly 30% without building any new mines, to become the world's most profitable producer of the steelmaking commodity.
- By increasing the efficiency of existing operations, BHP intends to boost production, while lowering production costs to less than $20 a ton (more than 25% lower than its average in the year through June 2014).
- The miner has already slashed hundreds of positions across its operations, and will likely cut hundreds more to make the goal a reality.
Oct. 3, 2014, 4:13 AM
- Gold miners have the greatest exposure to the Ebola outbreak, Deutsche Bank says. Iron ore and aluminum miners, and oil drillers also have some exposure.
- Randgold's (NASDAQ:GOLD) exposure is most acute, with 100% of its NPV in the affected region.
- AngloGold (NYSE:AU) has 53% NPV exposure.
- ArcelorMittal (NYSE:MT) has some exposure through its iron-ore mine in Liberia (6.5% of its output).
- BHP Billiton (NYSE:BHP) and Anglo American (OTCPK:AAUKF, OTCPK:AAUKY) aren't exposed to the region.
- Related: Exxon delaying some west Africa drilling work because of Ebola (Oct. 2)
- Related: ArcelorMittal contractor moving workers out of Liberia (Aug. 8)
Oct. 2, 2014, 12:58 PM
- Exxon Mobil (XOM -0.4%) and Pemex, Mexico's state-owned oil producer, sign a three-year cooperation agreement to exchange academic, scientific and technical knowledge in analyzing exploration, drilling and refining opportunities.
- XOM joins a growing list of major oil producers including Chevron (NYSE:CVX), Noble Energy (NYSE:NBL) and BHP Billiton (NYSE:BHP) in expressing interest in entering Mexico’s energy industry, which is ending a 76-year state oil monopoly.
Oct. 2, 2014, 8:25 AM
- Walter Energy (NYSE:WLT) +5.7% premarket after The Guardian says BHP Billiton (NYSE:BHP) or Rio Tinto (NYSE:RIO) may be interested in buying the coal company for $5/share.
- Clarkson Capital is out with a note saying the paper has passed along many rumors on U.S. coal activity over the years and none have proven true (Briefing.com).
Sep. 29, 2014, 2:22 PM
- BHP Billiton (BHP -1.1%) has sent its top project manager to run the Jansen potash development in western Canada, a move the potash market will scrutinize for clues to BHP's plans for its Canadian mine.
- If Jansen were to begin producing today, experts say it would increase global potash supply by nearly 15%, which would worsen an oversupply problem for the fertilizer ingredient.
- BHP already has committed ~$3.8B to a project it says has no fixed completion date, but analysts aren't expecting anything before 2020.
Sep. 26, 2014, 3:13 PM
- BHP Billiton (BHP -0.3%) and Mexico's state-run oil company Pemex have signed a deal to share knowledge of their deepwater operations.
- The partnership comes as Mexico is poised to open up oil production to foreign companies for the first time in decades, largely because Pemex is seen as lacking the technical expertise capitalize on reserves in the country’s shale basins and deepwater.
- BHP operates two fields in the Gulf of Mexico and has non-operating interests in three other Gulf fields; last year, it was the fourth-biggest producer in the Gulf.
Sep. 25, 2014, 2:54 PM
- Former Rio Tinto (NYSE:RIO) CEO Tom Albanese says the world's biggest mining companies are behaving rationally by digging out more iron ore even as prices continue to fall.
- "If you look at the forward curve two years ago, if you look at the estimates of supply and demand, there are no real surprises in the present market place that had not been anticipated," Albanese says.
- Iron ore prices have plunged 41% YTD to below $80/ton, their lowest level since 2009, exacerbated in large part by the world's three top iron ore miners - Rio, BHP and Vale (NYSE:VALE) - ramping up production in the hope they can profit from efficiencies of scale.
Sep. 25, 2014, 12:39 PM
- BHP Billiton (BHP -3.3%) says in its annual report that it may be close to resolving a U.S.-led investigation into possible violations of anti-corruption laws, some of which relate to its sponsorship of the 2008 Olympics in Beijing.
- BHP also says it will cut capital spending in its petroleum division by $279M in FY 2015 to ~$5.6B, down from nearly $5.9B in 2014 and $7.1B in 2013.
- Meanwhile, CEO Andrew Mackenzie earned an $8M package in his first year at the helm of the company, significantly less than predecessor Marius Kloppers had been receiving.
Sep. 24, 2014, 5:24 PM
- The Russian Arctic is not the only offshore region generating a potential political problem for Exxon Mobil (NYSE:XOM), as Forbes' Tim Threadgold thinks XOM also faces the possible loss of the giant Scarborough gas field off the coast of western Australia.
- The ultra-deepwater Scarborough is a difficult field to develop, not just because of its location but also because of Australia’s high domestic costs and the gas contains limited amounts of high-profit liquids.
- Threadgold says a recent statement from partner BHP Billiton (NYSE:BHP) that the company was focusing on North American oil and gas opportunities because they offer higher rates of return on investment could play into the hands of an Australian company - Fortescue Metals (OTCPK:FSUMF) - which would like to own Scarborough, and theoretically could do so without paying XOM and BHP a dollar under Australia's “use it or lose it” laws.
Sep. 24, 2014, 10:10 AM
- BHP Billiton (BHP +0.5%) is considering a secondary listing in London for a new company it is spinning off containing non-core mining assets in commodities including aluminum and manganese, WSJ reports.
- The spun-off company is currently planned to have a primary listing in Australia and a secondary listing in South Africa, which has drawn the ire of some London-based fund managers.
- Analysts say the new company could have a valuation of ~A$16B.
Sep. 23, 2014, 7:57 AM
- BHP Billiton (NYSE:BHP) and Mitsubishi say they plan to cut ~700 jobs from their joint Australian coal mining operations in central Queensland state, continuing a cost-cutting drive that has been going on for more than 18 months.
- The BHP-Mitsubishi Australian JV is the world's biggest exporter of steelmaking coal
- Coking coal prices are near their lowest levels in seven years as rising supplies of the commodity have outpaced demand; this year alone, prices have fallen more than 20%.
Sep. 22, 2014, 3:47 PM
- Cliffs Natural Resources (CLF -8.5%) plunges to 52-week lows as worries grow over the potential for an economic slowdown in China.
- Chinese steel production grew a mere 1% Y/Y in August, well off 2.6% YTD and 9%-10% growth recognized over the past few years; Wells Fargo's Sam Dubinsky views the data as negative for iron ore pricing, and thinks it means trouble for CLF, whose results could disappoint as the value of assets likely will diminish as pricing continues to fall.
- Also, a Bloomberg weekend report says coal demand in China may peak as soon as this year, which could further hurt coal miners such as CLF.
- Iron ore giants are lower: BHP -3.2%, RIO -2.7%, VALE -4.8%.
- Coal producers: ANR -9.7%, WLT -9.2%, ACI -7.7%, CLD -4.6%, BTU -4.4%, WLB -2.7%.
Sep. 16, 2014, 10:26 AM
- China says it will enact new laws banning the import and local sale of low-grade coal starting next year in a bid to curb its air pollution problem, with tough requirements in major coastal cities set to hit Australian miners such as BHP Billiton (BHP -0.4%), Rio Tinto (RIO -0.6%) and Glencore (OTCPK:GLCNF, OTCPK:GLNCY).
- China accounts for ~25% of Australia's coal exports, taking 54M metric tons of thermal coal and 30M metric tons of metallurgical coal from Australia in 2013; consultant Wood Mackenzie says all the thermal coal exceeded the new ash limit, while the met coal was below the limit.
- The most stringent requirements are for cities in the southern Pearl River Delta, the eastern Yangtze River Delta and three northern cities including Beijing, Tianjin and Hebei; the areas will be banned from burning coal that has more than 16% ash and 1% sulfur.
- Also, YZC -0.5%, KOL -0.4%.
Sep. 15, 2014, 12:42 PM
- News that China’s industrial production growth in August slipped to its lowest level since the 2008 global financial crisis could cause iron ore prices to extend their slide after reaching their lowest level in five years.
- Morgan Stanley says in a report that the price of iron ore could drop to as low as $70/ton from the current level of ~$82, but adds that prices may rebound towards $90/ton by year-end as China’s seasonal demand typically weakens before picking up again in Q4.
- Stanley’s forecast for a rally in the final quarter follows a similar prediction last week from Vale (VALE +0.8%), the world’s largest supplier, which said prices may be poised for a rebound to as much as $100/ton by year-end because of declining inventory at ports.
- Also: RIO +0.6%, BHP -0.8%.
Sep. 10, 2014, 5:15 PM
- Iron ore continues to slide, hitting fresh five-year lows on concerns about rising supply and slowing demand.
- Today’s decline - the price of benchmark ore for immediate delivery into China dropped another $1 to $82.20/metric ton - came as Goldman Sachs analysts wrote of "the end of the Iron Age," saying the long period of above trend in profitability enjoyed by the iron ore industry has been destroyed by the billions of dollars major producers have ploughed into new, low-cost capacity.
- The steelmaking material, which is critical to the profitability of several large mining groups including BHP Billiton (NYSE:BHP), Rio Tinto (NYSE:RIO) and Vale (NYSE:VALE), has dropped by nearly 40% this year, the worst performance among metals and bulk commodities.
- Goldman forecasts $80 iron ore next year and lowers its estimates for 2016 and 2017 to $79 and $78, respectively; Goldman says big producers will still be able to generate good returns at those prices but their ability to return capital to shareholders will be impaired.
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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