BHP Billiton is set to stay on top
It’s the world’s largest mining company: fact. The Aussie-Anglo mining giant, BHP Billion, The Broken Hill Proprietary Company, (LSE: BLT, NYSE:BHP, NYSE:BBL, ASX:BHP) has incredible assets spanning iron ore, silver, copper, nickel, uranium, aluminium, manganese, coal, diamonds and petroleum. It has over 40,000-staff in 100 operations spread over 25 countries and delivered a 2009 year profit totalling US$6.338 billion.

BHP Billiton in the beginning

Founded back in 1885, BHP began with a silver/Lead project at Broken Hill in New South Wales, Australia. The company has become a name associated with many of our most historically renowned mining havens over the years, and also, in the 1960’s with Bass Strait [the sea between Tasmania and the South Australian mainland] with petroleum exploration. Diversity has been a big part of the company’s growth, with an impressive project timeline which is literally teaming with acquisitions and purchases across the resources spectrum.

- In the early 80’s it was the Ok Tedi copper mine in Papua New Guinea,
- In 1984, it was the Escondida  copper  mine in Chile (57.5 per cent) through the takeover of Utah International from the General Electric Company,
- In November, 2001, it was the Etaki diamond mine in Canada through the acquisition of Canadian company Dia Met Minerals Ltd.,
- Also in 2001, through merging with the Billiton mining company to become BHP Billiton as we know it today, the Banka (Bangka) and Billiton (Belitung) projects in the Indonesian archipelago also joined the portfolio.
-In particular, the 1990’s saw considerable growth within the portfolio, reaching South Africa, Mozambique, Colombia, Brazil, and more in Australia amongst other worldwide locations. In this time, the company took on projects in aluminium, coal, base metals and more.

More recently, the global financial crisis has hit BHP just like everyone else. In January 2009 the company announced it would close its Western Australian nickel mine, The Ravensthorpe Nickel Mine, which it sold in December that same year to First Quantum Minerals, of Toronto, for US$340 million. Ravensthorpe was formerly part of BHP’s Nickel West operations in Western Australia, which include the Mount Keith Nickel Mine, the Leinster Nickel Mine, the Kambalda Nickel Concentrator, the Kalgoorlie Nickel Smelter and the Kwinana Nickel Refinery.

BHP in the news

Like many a major mining company with tires to Australia, BHP, and in particular it’s CEO, Marius Kloppers, and Chairman, Jaques Nesser, have been the subject of media attention in the mining Super Tax 40 per cent taxation plan set for introduction by the Australian government in 2012.

Most recently, this has been regarding its union with other mining majors, Xstrata and Rio Tinto, to issue a joint statement about the lack of government movement to solve disputes over the tax.

“During the meeting the companies outlined three fundamental areas of concern with the RSPT – ensuring the RSPT is not applied retrospectively, so existing projects where investment decisions have already been made are not affected; the need for an effective tax rate that retains Australia’s international competitiveness as an investment destination; and stability arrangements for taxes and royalties for existing and new projects,” the statement reads.

“At present there is no formal acknowledgment from government that these key issues will be addressed.”

BHP has been forthright and outspoken in the wake of the Super Tax. Nesser speaks at length, appealing to both the BHP shareholders and people concerned for Australia’s future, in a video linked from BHP’s homepage. Of course, as the largest mining company in the world, a lot of opinion has been sought from BHP on the issue.

BHP’s aims and future plans

“Our purpose is to create long-term shareholder value through the discovery, development and conversion of natural resources and the provision of innovative customer and market-focused solutions,” BHP states in its corporate profile.

“As at 30 June 2009, we had a market capitalisation of approximately US$144 billion. For the year ended 30 June 2009, we reported net operating cash flow of US$18.9 billion and revenue of US$50.2 billion.”

The company says that it will continue to “invest in the future and have a deep inventory of growth assets,” and assures that its projects are selected and orchestrated to ensure stability long-term and stay resilient in any market volatility on a short-term basis.

There are current plans to ramp up its West African iron ore project in Liberia, supposedly due to the more lucrative tax rates than those which look set to apply in Australia’s future. On June 12, BHP signed a US$3 billion dollar iron ore agreement with the country for this project. This is where one of the company’s key strengths plays out; those assets carefully positioned to thwart any threat of market volatility, unrest or drastic change. It’s a changeable time for Australian mining, but companies like BHP offer guidance, support and industry-example for how to avoid getting crushed under the weight of this. The company’s story is one of measured and careful growth and diversification.

bhpbilliton.com