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Boom Times for Mining Giant Signal Deep Changes in Sector
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BHP Billiton was known as Broken Hill Proprietary in the 1990's. The largest Australian mining company, it was based in Melbourne and simply known as the Big Australian. It had huge losses in that period - $3 billion in 1998-1999. The turnaround at BHP Billiton comes as a remarkable turnaround for the whole mining sector. BHP made $6.5 billion in profit in the year ending June 2005. Its not just rising Chinese demand that has made this possible. Billiton has taken steps to avoid past boom bust cycles in mining by taking a conservative approach to investing in new mines that might create an oversupply in the market. The company is run buy a banker. CEO Charles Goodyear avoids taking on large risky projects and has announced plans to return $2 billion to shareholders in stock buybacks. Even with this discipline compared to the past, some mining analysts believe the boom bust cycle will occur over time. HP has $10 billion worth of projects in different stages of development. One advantage the mining companies enjoy is the concentration of mining in a few companies- BHP, Rio Tinto, Xstrata PLC. This makes it possible to price aggressively for the nickel, copper, iron ore, and other metals. A 72% price increase was negotiated with steelmakers in 2005. Another part of the transformation is the use of risk-analysis tools. BHP uses "Monte Carlo analysis" to check all potential outcomes once a range of parameters- commodity prices, currency vales, interest rate scenarios- are entered that affect financial performance of a new mine or a new investment. Goodyear came in as CFO under a new team led by Paul Anderson, a former executive of Duke Energy Corporation, after the huge losses in failed copper mining investments in the late 1990's. Even with the recent success and the careful investing discipline there is a sense that things could change quickly if rising demand slows in China and other developing countries. And in that situation this discipline may prove insufficient and the models may only be good as the assumptions and information entered.
Commodities and Avoiding Boom Bust cycles
04/13/2006
BHP Broken Hill Proprietary, big Australian mining company and how its working the commodity business a different way from the past. Comparison to oil Companies and similar issues faced by oil companies though more complex in the case of oil.
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Vale SA performance
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Brazil's largest mining company.
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Brazil's Vale Reduces Stake in Controversial Dam
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Vale Looks to Carve Out a Fertile Future
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China’s Slowdown Hits Price of Iron Ore
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BHP Looks Past Travails, Remains Upbeat on China
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Rio Tinto management
04/13/2006
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Rio Tinto's First-Half Profit Falls 71%
Wall Street Journal 08/09/2013
Rio Tinto's Time-Consuming Turnaround
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Rio Tinto's Walsh Still Faces Major Challenges Ahead
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Economist 02/02/2009
Rio Tinto Already Has Metallic Tinge
Wall Street Journal 07/10/2014
Rio Tinto Digs In as Rival Spins Off
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Oil and commodities prices in 2009, the first year of the Obama administration.
04/13/2006
Oil prices surge as a new global liquidity cycle takes hold, and China stocks up on oil and other commodities like copper to reduce its massive dollar holdings that are in danger of being devalued. During the first half of 2009 Obama introduced a stimulus of nearly $1 trillion and the Fed stepped in with massive liquidity in the face of a credit crisis.
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Odd Couple: Commodities, Fundamentals
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Gold Runs Back Toward $1,000 an Ounce
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Australian Dollar Soars, Helped by Metal Demand
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Companies Stock Up as Commodities Prices Rise
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The steel industry worldwide in 2010-2011
04/13/2006
Grouped Articles
Steelmakers Brace for Weak Demand
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Wall Street Journal 10/27/2010
Expenses Outstrip Steelmakers' Pricing Gains
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Nippon Steel, Sumitomo Metal to Merge
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Arcelor Predicts U.S. Rebound, Posts $780 Million Loss
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India's steel industry.
04/13/2006
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India's Bitter Choice: Water for Steel or Food?
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Expenses Outstrip Steelmakers' Pricing Gains
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India Approves Long-Delayed Steel Mill Project
New York Times 01/31/2011
Nippon Steel, Sumitomo Metal to Merge
Wall Street Journal 02/03/2011
For Global Steel Industry, China Poses Guessing Game
Wall Street Journal 05/24/2011
Boom Times for Mining Giant Signal Deep Changes in Sector
Wall Street Journal 04/13/2006
Chile's copper exports
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In South America, a Mine of Riches and an Economic Sinkhole
New York Times 09/11/2010
A South America Stalwart, Chile, Tries New Revival Tactic
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Slowdown in China Bruises Economy in Latin America
New York Times 12/16/2014
Copper Shouldn’t Fall Down Oil’s Well
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Economist 08/24/2015
How the Fed Will Read Copper’s Diagnosis
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BHP Billiton
04/13/2006
Australia's largest mining company.
Grouped Articles
Wall Street Journal 05/01/2013
After Going All In During Mining Boom BHP Cuts its Ambitions
New York Times 08/08/2013
Weaker Prices Push BHP's Net Down 30%
Wall Street Journal 08/21/2013
BHP Aims to Boost Iron-Ore Output Even as Prices Fall
Wall Street Journal 07/24/2014
Rio Tinto Digs In as Rival Spins Off
Wall Street Journal 05/07/2015
Overheard: South32’s Not-So-Fond Farewell to BHP Billiton
Wall Street Journal 07/23/2015
Xstrata PLC
04/13/2006
Grouped Articles
Wall Street Journal 05/02/2013
Wall Street Journal 08/20/2015
Boom Times for Mining Giant Signal Deep Changes in Sector
Wall Street Journal 04/13/2006
Wall Street Journal 02/03/2012
Surge in commodities prices- 2010-2012
04/13/2006
Grouped Articles
After Going All In During Mining Boom BHP Cuts its Ambitions
New York Times 08/08/2013
Commodities Fall as Stockpiles Mount Up
Wall Street Journal 01/19/2015
Prices of Raw Goods Plunge on Slowdown
Wall Street Journal 07/01/2012
Companies Stock Up as Commodities Prices Rise
Wall Street Journal 02/03/2011
Sugar Prices Hit New Heights on Australian Cyclone
Wall Street Journal 02/03/2011
A Cotton Market Targets Speculators
Wall Street Journal 02/04/2011
Pricing in the steel industry
04/13/2006
Grouped Articles
Steel-Price Increases Creep Into Supply Chain
Wall Street Journal 02/03/2011
For Global Steel Industry, China Poses Guessing Game
Wall Street Journal 05/24/2011
Boom Times for Mining Giant Signal Deep Changes in Sector
Wall Street Journal 04/13/2006
Wall Street Journal 11/04/2011
Steelmakers Confront Oversupply Worries
Wall Street Journal 04/30/2012
Steelmakers Gain Breathing Room
Wall Street Journal 12/06/2012
China's Steel Industry.
04/13/2006
China's effort to close small inefficient mills and reduce supply.
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China's Leaders Move to Rein In Steel Mecca
Wall Street Journal 01/06/2014
Why Chinese Steel Exports Are Stirring Protests
Wall Street Journal 03/16/2015
U.S. Imposes 266% Duty on Some Chinese Steel Imports
Wall Street Journal 03/02/2016
China Takes a Hard Look at Its Steel Industry
Wall Street Journal 10/13/2009
China's Steely Resolve Faces a Challenge
Wall Street Journal 12/27/2010
Expenses Outstrip Steelmakers' Pricing Gains
Wall Street Journal 01/26/2011
Metal prices
04/13/2006
Prices of copper, aluminium and other metals with demand from China, Brazil, and other countries.
Grouped Articles
China Deal Shows Optimism Over Copper Prices
Wall Street Journal 04/14/2014
Copper Shouldn’t Fall Down Oil’s Well
Wall Street Journal 01/15/2015
Copper, Aluminum Prices Follow Gold’s Wake to Hit Multiyear Lows
Wall Street Journal 07/25/2015
Global Growth Worries Pummel Commodities
Wall Street Journal 07/25/2015
Economist 08/24/2015
How the Fed Will Read Copper’s Diagnosis
Wall Street Journal 11/13/2015
Strategies of mining companies BHP and Rio Tinto of Australia to cope with a slowdown in China and falling commodity prices
04/13/2006
Linked Articles
Mining Firms Bulk Up, Echoing Big Oil Mergers
Wall Street Journal 12/18/2007
Boom Times for Mining Giant Signal Deep Changes in Sector
Wall Street Journal 04/13/2006
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