BHP Chief Kloppers Says He Plans Acquisitions as Mining Deals Accelerate
BHP Billiton Ltd Chief Executive Officer Marius Kloppers
Carla Gottgens/Bloomberg
BHP Billiton Ltd Chief Executive Officer Marius Kloppers.
BHP Billiton Ltd Chief Executive Officer Marius Kloppers. Photographer: Carla Gottgens/Bloomberg
BHP Billiton Ltd. (BHP), the world’s biggest miner, plans to make more acquisitions as Glencore International Plc (GLEN)’s $39 billion bid for Xstrata Plc (XTA) extends takeovers in the commodities industry.
“I have absolutely no doubt that over time we will do more transactions,” Chief Executive Officer Marius Kloppers told Australian Broadcasting Corp. television yesterday, without specifying targets. He declined to comment on speculation the Melbourne-based company may target Anglo American Plc. (AAL)
BHP Billiton, which last week posted a 5.5 percent decline in first-half profit, spent $16.9 billion on shale-gas acquisitions in 2011 after failing in bids to buy Rio Tinto Group (RIO) and Potash Corp. of Saskatchewan Inc. Global mining deals swelled last year to $98 billion, the most since 2007, from $76 billion in 2010, according to data compiled by Bloomberg.
The combination of Glencore and Xstrata will create the world’s fourth-largest miner, behind BHP, Rio Tinto and Vale SA. (VALE3)
Kloppers said a decline in iron ore prices probably won’t affect BHP’s plans to spend $80 billion over the next five years to boost output of the commodity along with copper and coal.
The company’s projects include the $7.4 billion expansion of its Pilbara operations and an $822 million investment in a new mine near Newman, both in Western Australia.
Iron Ore Prices
Iron ore for immediate delivery fell 10 cents, or 0.1 percent, last week to $142.70 a metric ton, according to a price index compiled by The Steel Index Ltd. on Feb 10. That compares with a price of $188 a year earlier.
“Even if that price comes back a little bit more, we are going to make very good returns on those projects,” Kloppers said.
While strikes by some workers are unlikely to affect its expansion program, BHP Billiton may cut output at poor performing mines with higher costs.
Workers at its coking-coal mines will strike for seven days from Feb. 15 after rejecting the company’s latest offer, the Construction, Forestry, Mining and Energy Union said Feb. 9.
About 3,500 workers at BHP’s mines in Queensland’s Bowen Basin have staged rolling strikes since June over pay and conditions, before suspending industrial action in December to resume contract talks. Labor unions globally are stepping up demands for higher wages and improved conditions as record commodity prices swell profit at mining companies.
No Cancellations
“It would take a fairly big event for us to say we are going to stop, slow down or otherwise cancel a project,” Kloppers said. “Where an existing operation doesn’t make profit we are more probably likely to say this is not making profit, let’s curtail production.”
BHP Billiton’s net income fell to $9.9 billion in the six months ended December from $10.5 billion a year earlier, the company said Feb. 8.
The decline was its first since 2009 as rising costs and lower output and prices cut base-metals earnings.
To contact the reporter on this story: Robert Fenner in Melbourne at rfenner@bloomberg.net
To contact the editor responsible for this story: Jim McDonald at jmcdonald8@bloomberg.net
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