BHP Billiton Share Discussion Threads

[edjge2] 08/3/2016 21:55

Still in the uptrend but bottom of range?

[loganair] 08/3/2016 15:59

BHP’s Western Australian iron-ore asset president, Edgar Basto, said on Tuesday that Chinese steel production was expected to peak in the 2020s at about 935-million tonnes to 985-milllion tonnes, from around the current 800-million tonnes.

“The trajectory of further demand growth into the 2020s reflects the fact that China is still a developing economy, with steel stock at five tonnes per capita. This is approximately half the level of developed countries, implying that there will be sustained incremental steel demand growth,” Basto said at the Global Iron Ore and Steel Forecast, held in Perth.

He added that the replacement of old stocks and exports would also be key drivers of long-term steel production. “By sector, we believe that while construction steel demand in China might have peaked, manufacturing sectors like machinery, automotive industry and home appliances will maintain a sustainable growth outlook.”

In the short term, BHP expected the Chinese government’s restructuring plans, to deal with over-capacity issues, to take time to implement, with Basto adding that a reduction in excess capacity would mean improved sustainability over time. However, variability was expected to remain in the short term.

“Overall steel and pig iron production are expected to be subdued in 2016; however, over the longer term, we continue to expect Chinese steel production to grow.”

On the supply side, Basto noted that Australian and Brazilian seaborne exports had increased by about 40% between 2010 and 2014, while some greenfield projects, which were still in their ramp-up and construction phases, would result in further supply to the seaborne market in the short to medium term.

“Lower-cost seaborne supply has gradually displaced higher-cost supply, initially displacing Chinese private mines production and more recently higher-cost seaborne supply.”

“It is evident that the supply side has proven to be price sensitive with prices returning to historical long term averages.

This means we expect further price volatility in the short term.” Basto told delegates that BHP had maintained its share of iron-ore exports since the beginning of the last decade, with the company focusing on decreasing production costs.

At its Western Australian iron-ore assets, BHP’s productivity drive, as well as favourable exchange rate movements, resulted in unit cash costs reducing by 47% since the beginning of 2013, to $15.2/t in the first half of 2016.

Efficiency improvements had also resulted in the iron-ore assets increasing production by some 6%, to a record 131-million tonnes in the first half of the 2016 financial year.

“We have further to go to reduce costs, and there is significantly more upside to come,” Basto said.

[loganair] 08/3/2016 15:56

BHP Billiton said today it continues to increase its productivity in Port and Rail, despite a lower price environment. The company is approaching its targeted run rate of approximately 270 million tonnes per annum.

Speaking at the Global Iron ore and Steel Forecast Conference, asset president Western Australia Iron Ore (WAIO), Edgar Basto said, BHP Billiton is meeting the challenges of the global iron ore market through a focus on productivity and a "relentless pursuit of the basics" in its WAIO operations.

He noted that following a decade of strong growth driven by fixed assets investments, the Chinese economy is transitioning to a more consumer and services based model, with future growth likely to be inherently less steel intensive.

The company is planning a range of measures such as the optimisation of its pit-to-port scheduling strategy and alignment of maintenance shutdowns across its mines, port and track. It expects major reduction in costs across its operations.

"Our productivity drive has supported an EBITDA margin of over 50 per cent at WAIO despite the iron ore price halving since 2012," Basto said.

[loganair] 08/3/2016 09:07

And not forgetting - Iron ore, one of the key commodities for many miners, rose almost 20 per cent to $62.60 a tonne on Monday — the biggest one-day rise since the index began in 2009.

While analysts caution that excess supplies in many commodity markets should continue to weigh on prices, the near panic-level selling seen in January has abated. “I think that if we’re not at the bottom then we can’t be far off,” said Julian Kettle, head of metals at Wood Mackenzie. “People are starting to get far less negative about China.”

China will tackle overcapacity in its steel and coal sector, policymakers said at the annual meeting of the national legislature in Beijing at the weekend. Copper, aluminium and zinc have all rallied by between 10 and 25 per cent since January, when they hit the lowest level since the financial crisis.

“We’ve seen a return of risk appetite,” said Michael Wittner, analyst at Société; Générale. “[But] it’s going to be volatile and it’s not a slam dunk that prices keep going up from here in a straight line.”

[badg] 07/3/2016 15:47

wow - what a difference in the last week following the settlement in Brazil and the known costs over the next 5 years. Takes away that uncertainty.

I was in very much too early in a big way before the dam burst and have been sitting on a massive loss! Very happy to see this latest rise = the chart looks better now for back up to £10,11,12 maybe… obviously with pull backs along the way but the right direction.

I have never been personal on here about anyone's post - except now… and hope that RICKMAY has got his shorting fingers burnt with that "£2 £3 soon" constant posting.

That's all folks and good luck

[idioterna] 07/3/2016 12:41

…of course, with the exception of RIO, another $10 a tonne won't help most producers, they need $20 more just to break even and pay the interest on their loans. BLT is going to have the banks by the balls come the autumn.

[loganair] 07/3/2016 10:00

BHP says that if the price of iron ore rises by $1/tonne, then all else being equal, the group’s 2016 net profit will rise by $147m. Given that BHP is only expected to report a net profit of $873m in 2016, it’s clear that a small improvement in the price of iron ore could give a big boost to profits.

[edjge2] 07/3/2016 07:36

Opposite of FEDs strategy, divi down so can up it, in case metals don't cooperate

[idioterna] 04/3/2016 16:41

Yep, turned profitable at $26.96 here. Really annoyed they caved in on the dividend now, but given commodity lows were in december (and don't forget we were still profitable then), there should be a big dividend upgrade on the way come september.

[loganair] 04/3/2016 16:07

I jumped in a little too early as well, but great to see that I´m now well back into profit.

[idioterna] 04/3/2016 13:16

pre-market looking good for $27+.

[pixi] 04/3/2016 11:50

I bought 3,000 at 8.361.

[idioterna] 04/3/2016 10:16

It looks like I jumped in two months too early but you get itchy fingers after seven years asleep. It would appear that £12 is the next serious resistance.

[edjge2] 04/3/2016 07:13

Idiotherma, hope I add a bit of humour in obviousness.
Hope downgrade proves +ve like AAL, yes sorting of tailings looks good too. Hope commodities have turned.

[anley] 03/3/2016 16:26

and they have applied to put the "tailings" in another area close by. This means the mine can start again and the cash flow used for settling the claims hence the payment schedules.

That is good long term news for us shareholders.

[idioterna] 03/3/2016 12:47

Very detailed and insightful spot of analysis there edjge2, thanks for that.

[edjge2] 03/3/2016 09:33

Bit more bad stuff fixed. Needs to motor some to catch up with AAL. Does have a divi though. Advantaged with oil, may play out.

[loganair] 03/3/2016 09:32

Telegraph - Mining giant BHP Billiton has agreed to settle a £1.6bn claim over the Samarco disaster in Brazil, where a dam burst left people 17 dead and two missing, and flattened two villages.

Samarco, a joint venture between BHP and Brazilian company Vale, will pay up to $2.3bn (£1.6bn) to fund a foundation scheme to restore the local environment that was devastated by the resulting flood, and pay compensation to the people affected. BHP's total contribution for the disaster will be $US1.15 billion (£800mln).

The Samarco venture will pay into the fund in tranches over the course of six years; the amount for the first three years is fixed, with variable amounts for the second three years. The foundation will run for 15 years, and further costs may be incurred after the initial six-year period.

The fund will receive $500m from the jointly--owned Samarco this year, followed by $300m in both 2017 and 2018.

Between 2019 and 2021, a further payment will be paid of at least $200m and up to $400m depending on the cost of projects needed at that time.

As the payments will be funded by Samarco itself, it implies the mine will restart operations at some point in the near future, although no such move has yet been confirmed and the company’s 5,000 staff are still suspended on full pay.

If Samarco cannot make the payments from its own funds, they will be made by BHP and Vale.

The agreement settles a claim lodged by Brazilian authorities in November and is less than the total 20bn real (£3.7bn) figure the government had been seeking. It does not, however, preclude further legal costs and challenges relating to Samarco.

[loganair] 02/3/2016 16:49

Idioterna - All I do is to share information that I come across, maybe either negative or positive towards BHP which I may or may not agree with.

One thing is I am not and have never been a ´trader´ as usually I hold shares I buy for at least 5 years or more.

[idioterna] 02/3/2016 16:36

Jeeeez Logan you swing faster than a 60 year old couple from Alabam.. Now it's a buy? What happened to the "OMG" this is a disaster at $20? So now it's worth $30 again. I rest my case, trading is for gamblers, now't else.

[loganair] 02/3/2016 09:29

BHP Billiton also seems to be worth buying at the moment. It remains one of the best diversified miners in the world, although this hasn’t helped its profitability in recent years since the prices for copper, iron ore and oil have all fallen heavily. The effects of this are still being felt, with BHP Billiton’s earnings due to fall by 88% in the current year. Therefore, investor sentiment may remain weak in the near term.

Looking a little further ahead, however, BHP Billiton’s strategy of cutting costs and restructuring its business could be about to pay off. Earnings forecasts for the next financial year show that pre-tax profit is set to almost double to £2.8bn and this could be the start of improved performance for the business. This rapid rise in earnings puts BHP Billiton on a PEG ratio of only 0.3 which, while higher than the respective figures for Fresnillo and Antofagasta, still indicates that BHP Billiton has a very favourable risk/reward ratio.