BHP Billiton says it is co-operating with a probe into possible violations of corruption laws during its sponsorship of the 2008 Beijing Olympics.
Read more: BHP target of Olympic bribery probe
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Mining giant BHP Billiton says its chief executive Marius Kloppers will retire in May, and will be replaced by Andrew Mackenzie.
Here is the original post: BHP Billiton boss Kloppers to retire
Latest statement from mining company suggests that the search for a successor to Marius Kloppers is under way
“Succession planning for the CEO and senior management team is an ongoing process and one of the most critical tasks of any board,” said BHP Billiton yesterday. That is not confirmation that boss Marius Kloppers is heading for the exit in the next year or two. But it is a reasonable hint that a search is now under way.
Kloppers has a decent record. The biggest feather in his cap is that BHP avoided a rights issue when commodity prices collapsed in 2009. Rio Tinto and Xstrata did not. That counts for a lot, notwithstanding the subsequent failed pursuit of Potash Corporation in Canada and the overpayment for shale gas assets in the US.
Kloppers is only 50 but, if he is going soon, it’s probably helpful for chairman Jac Nasser that the obvious internal candidates know so. Management wheels in the mining industry are turning, not least at Anglo American. Best to keep Alberto Calderon, Andrew Mackenzie and Marcus Randolph – all older than Kloppers – focused on the chance of internal promotion.
Labor’s Martin Ferguson says mining boom has peaked after BHP Billiton delayed two major expansion projects
An Australian government minister has declared the end of the resources boom that had cushioned the country against the global financial crisis, a day after the world’s biggest miner, BHP Billiton, shelved two major expansion plans worth at least $40bn (£26bn).
“The resources boom is over,” resources and energy minister Martin Ferguson told Australian radio on Thursday. “We’ve done well – $270bn (£178bn) in investment, the envy of the world. It has got tougher in the last six to 12 months.”
Ferguson’s comments came after BHP announced it was indefinitely delaying the planned $20bn (£13bn) Olympic Dam copper expansion in South Australia and plans to build a new harbour, estimated at more than $20bn, to nearly double its iron ore exports in Western Australia, looking for cheaper alternatives.
But Ferguson’s Labor party colleague Senator Penny Wong, the finance minister, disagreed with his assessment. “We still have a lot of investment coming in to this country, about half a trillion dollars in the pipeline and more than half of that at the advanced stage,” she told ABC News Breakfast.
“I think the mining boom still has a long way to run. But what I would say is that the government has always assumed that the terms of trade would step down over time, that’s what our budget is predicated on.
“I think Mr Ferguson was referring to when the terms of trade peaked, and that’s factored into the Government’s budget.”
Ferguson later released a statement rowing back from what he had initially said. “The commodity price boom is over but in terms of investment in Australia the boom continues,” he said.
Fuelled by Chinese-led demand for coal, iron ore and other resources, Australia’s economy was one of the very few in the developed world to sail through the global financial crisis without sliding into recession.
The resources boom fuelled what has been dubbed a two-speed economy, which has pumped up the Australian dollar and exacerbated the pain felt in manufacturing sectors and retail in Australia’s most populous states.
While manufacturers like Ford and Bluescope Steel have shut down plants and axed jobs, Australia’s unemployment level has stayed around 5% thanks to substantial jobs growth in resources projects, where truck drivers command six-figure pay packets.
Politicians may be worried the whole economy is moving into the slow lane but analysts say the fear is premature, as energy projects, underpinned by customers who have already been locked in, will continue full steam ahead.
“A marriage of our macroeconomic research with analysis of already committed and possible projects has confirmed our expectations that a peak is coming, but is yet to arrive,” National Australia Bank economists said in a report.
NAB expects the resources boom to peak in 2013 and 2014, when resource capital spending will be around 1% of gross domestic product higher than now.
BHP put the Olympic Dam expansion on hold as it reported a 35% slide in second-half profit, the biggest sign of the pain inflicted by the slowdown in China’s economic growth.
Weaker demand from China has knocked prices of all key commodities, including iron ore, languishing at its lowest levels since December 2009, copper, coal and aluminium, clouding the outlook for all miners.
In response to pressure from shareholders worried about poor returns in a weak global markets, miners have put the brakes on capital spending, with BHP on Wednesday announcing it would not sanction any major new projects in the year to June 2013.
The Olympic Dam project, which had been due for approval by December 2012, would have created 25,000 jobs, according to the South Australian government.
“The next round was always going to be difficult and I must say Olympic Dam was always a very, very challenging project – its sheer size,” Ferguson said.
He said he still hoped the project could go ahead. “Our requirement now is to continue to work together in partnership, South Australian and Australian governments, with BHP Billiton to actually get this project in place,” he said.
Miner BHP Billiton announces writedowns in shale gas and nickel assets of $3.3bn (£2.1bn) and says its chief executive will forgo his 2012 bonus.
Continued here: BHP in $3.3bn writedown on assets
Australia’s carbon and mineral resources taxes come into effect today, with major polluters facing a charge of A$23 ($23.55) per metric ton of so-called greenhouse gases they produce. Miners such as BHP (BHP) and Rio Tinto (RIO) will have to pay 30% of their profits from iron ore and coal. The government is optimistic about the revenues it will generate, but UBS is not so sure. 3 comments!
View original post here: Australia’s carbon and mineral resources taxes come into effect today, with major polluters facing a charge of A$23 ($23.55) per metric ton of so-called greenhouse gases they produce. Miners such as BHP (BHP) and Rio Tinto (RIO) will have to pay 30%…
Category : Stocks
S. Australia warns that it won’t grant BHP (BHP) an extension to the right to proceed with a $33B expansion of the Olympic Dam copper-uranium-gold mine unless the company starts work on the project by the end of the year. BHP recently said it was scaling bank a five-year $80B investment program amid falling commodity prices. Post your comment!
Read more: S. Australia warns that it won’t grant BHP (BHP) an extension to the right to proceed with a $33B expansion of the Olympic Dam copper-uranium-gold mine unless the company starts work on the project by the end of the year. BHP recently said it was…
Geoff Hiscock, author of Earth Wars, says the battle for the globe’s natural resources is growing more heated and will lead to higher profits for international miners and oil companies.
Here is the original post: Miners, Oil Majors Will Win "Earth Wars"
Morgan Stanley says Costa could be worth £1.5bn, and says Whitbread could sell £250m worth of property annually
It’s not a new idea, but a broker note has repeated the suggestion that Whitbread could usefully demerge its Costa Coffee business – at a value of up to £1.5bn – to boost its shareholder value.
Morgan Stanley – which happens to be the company’s corporate broker – also said selling around £250m of property a year would also make sense, to help pay for investment for its hotels business. Analyst Jamie Rollo said:
We see Whitbread as somewhat of a conundrum, being part hotel operator, part coffee chain operator and part property owner. While the group should be able to generate double digit growth thanks to its aggressive expansion plans, it continues to trade on a discount to its peers. We think it could optimize its holding company structure to create even greater shareholder value. We see this happening in two ways:
Costa demerger: we think the arguments for retaining Costa are thinning given the business is now large enough and cash generative enough to be separately listed, at a time when quick service restaurants multiples are close to record highs.
With forecast earnings for Costa of around £130m in 2013, Morgan Stanley thinks the business could be worth between £1.25bn and £1.5bn – up to half Whitbread’s market capitalisation for an operation which generates just 20% of group earnings. And after demerging Costa, the bank thinks Whitbread should tackle its property portfolio:
We think the remaining business, which could be renamed Premier Inn, should undertake a rolling £250m annual sale and leaseback (preferably with a variable turnover linked lease) in order to finance its high capital expenditure levels.
This would mean the company’s strong underlying free cash flow (pre-capex) could finance a 50% increase in the ordinary dividend, increasing its yield to over 4%. Such a programme, over four years, is not that material in the context of the £3.5bn property portfolio, and would not materially change leverage ratios. It would also crystallize the development gains the new projects generate, part funding some of the capex for free.
Looked at another way, investors are getting either Costa or £1bn real estate for free.
But Rollo added:
The company is confident in its strategy to retain Costa and retain a substantially freehold estate, and we do not sense any impending changes. But we think this is mainly a timing issue, with both these changes possible on a medium-term view, given the company’s track record for focusing down on its core businesses.
Whitbread shares are currently 9p higher at £17.20 in a falling market.
Worries about Chinese demand for commodities after comments from BHP Billiton, down 63.5p at 1984.5p, have hit the mining sector and the overall market. The FTSE 100 is down 63.04 points at 5898.07.
Vodafone is leading the risers after a positive note from Morgan Stanley – which in part repeats the idea of a merger with US group Verizon – and also news from India. The country’s supreme court has dismissed a plea from the tax office against a ruling the mobile phone group was not liable for$2.2bn tax on its purchase of assets in India in 2007.
Elsewhere Cairn Energy has climbed 14.1p to 346p. The exploration group reported a record $4.6bn profit in a year when it sold the bulk of its Indian business to Vedanta Resources and had mixed results from its Greenland programme. It said it had $1.2bn to spend – partly from the Indian proceeds – on new projects to offset its exposure to Greenland.
Meanwhile Unilever has fallen 28p to £20.61 after Investec downgraded its buy recommendation for the first time since 1995. Analyst Martin Deboo said:
We move to holders, for the first time since 1995 (yes really.) Despite the symbolism, this reflects less a fundamental change of view but more a hard-nosed response to the threats of re-inflating commodities and change afoot at Procter & Gamble, both of which need we think to be weighed against a still-not undemanding valuation. Fearing another of year of slow grind and risks to input cost guidance, we return to the pavilion, a little older and greyer.