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BHP CEO Sees M&A Capacity; May Target Copper, Energy, Potash

Aug. 24 (Bloomberg) -- BHP Billiton Ltd., the world’s biggest mining company, has capacity on its balance sheet for opportunistic mergers and acquisitions and may target copper, energy and potash, Chief Executive Officer Marius Kloppers said.

“The balance sheet has got capacity” for sizable M&A, Kloppers, 48, told reporters at a briefing in London. “Opportunity has always been the limiting factor, not ability to fund, and I don’t think that that has changed.”

BHP today said second-half profit climbed to a record $13.1 billion, beating analyst estimates, after prices of copper, iron ore and coal reached all-time highs on Chinese demand. The Melbourne-based company agreed to buy Petrohawk Energy Corp. for $12.1 billion in July, adding to a $4.75 billion purchase of Chesapeake Energy Corp. shale gas assets in March.

“It’s fairly clear that major acquisitions from a regulatory perspective in iron ore and potentially even in coking coal would be quite difficult,” Kloppers said. “Non-organic growth really has got to come from perhaps base metals, copper, or petroleum, oil and gas, or potentially in potash. The universe of potential things that we would be interested in is not that large.”

BHP, a partner in the world’s biggest exporter of coking coal and the third-largest shipper of iron ore, rose 2.3 percent to 1,932.5 pence by the 4:30 p.m. close of London trading.

‘Comfortable’ Gearing

BHP and Nyrstar NV failed to reach an agreement in talks on a joint bid for Lundin Mining Corp., two people familiar with the matter said earlier this month. Lundin owns zinc and copper mines in Europe as well as a stake in a copper and cobalt mine in the Democratic Republic of Congo.

BHP is “very comfortable” with gearing of about 27 percent after the Petrohawk deal, Kloppers told Bloomberg Television in an interview. Prior to the acquisition, the company had gearing of 9 percent as of June 30, it said today in a statement.

The company may expand in shale gas outside the U.S. following Petrohawk, Kloppers said earlier on a call with reporters. BHP is “less interested” in acquiring oil sands operations because they’re “processing-intensive,” he said in an interview on “In the Loop” on Bloomberg Television. “We are sort of more just a pure upstream company; dig it up, put it on a ship.”

To contact the reporter on this story: Jesse Riseborough in London at jriseborough@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

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