Appendix C: BHP Billiton Chronology
Appendix D
Annual Summary
Appendix D
10 Year Total Return of BHP
Appendix D.1
Annual Per Share Statistics
Appendix D.1
Share price of BHP from Sep 2009 to Sep 2010
Appendix D.2
Annual Ratio Analysis
Appendix D.2
Annual Ratio Analysis (continued)
Appendix D.3
Financial Statement Figures & Analysis
BHP Billiton Group's overall profitability ratio has drop over the past two years as compared to 2007, with a slight decrease from 25.83% in 2008 to 22.15% in 2009; which may be due to the undiversifiable financial crisis from 2007 to 2010.
The group did not fully utilize the inventory and assets. Inventory turnover and asset turnover had decreased from 1196.90% to 1045.53% and 78.40% to 63.99% respectively. Return on equity and return on asset had decrease from 40.09% to 27.95% and 21.33% to 15.08%. There is a drastic decrease on the return on equity from 40.09% to 27.95%, which may be due to agency cost. As a result, these decreases could lead to a lower net profit.
The quick ratio and current ratio have improved from normal and acceptable positions in 2008 to desirable level of 1.49:1 (quick) and 1.9:1 (current) in 2009.
Inventory holding has gone from 30.5 days to 34.91 days. The accounts receivable collection period has shown improvement from 49.07 days to 26.83 days. The accounts payable period of 40.69 days (2009) and 41.56 (2008) had been stable over the past 2 years. Its high current and quick ratio in addition with negative cash conversion cycle, the group will be more liquid.
Net Gearing had improved from 21.66% to 13.72%, reflecting that the group has lower source of fund from borrowing.
Decreased in net profit, had resulted in decrease in earnings per share (in cents) from 285.38 to 246.8. Dividends (in cents) had increased from 75.5 to 109.7.
Appendix D.3
Financial Statement Figures & Analysis (continued)
Appendix E: Customer Sector Group
The following table provides a summary of the performance of the Customer Sector Groups for the year ended 30 June 2010 and the corresponding prior year. Year ended 30 June.
Appendix E: Customer Sector Group
Geographical information Revenue by location of customer (Year 2010)
Appendix E: Customer Sector Group
Geographical information Revenue by location of customer (Year 2009)
Geographical information Revenue by location of customer (Year 2008)
Appendix F: BHP Consumer Demand Growth
Appendix F: BHP Consumer Demand Growth
Appendix F: BHP Consumer Demand Growth
Appendix F: BHP Consumer Demand Growth
Appendix G: Competitors
Rio Tinto
Same as BHP, Rio Tinto is headquartered in Australia, Melbourne. Its major products include aluminium, copper, diamonds, energy products, gold, industrial minerals (borates, titanium dioxide, salt and talc), and iron ore. Its activities span the world but are strongly represented in Australia and North America. There are also significant businesses in South America, Asia, Europe and southern Africa.
Group financial results by product group
Source: Rio Tinto Annual Report 2009 (http://www.riotinto.com/annualreport2009/performance/index.html)
Revenue by Geographical
Source: FinAnalysis (http://0-www.aspectfinancial.com.au.prospero.murdoch.edu.au:80/af/company/interimsegperformance?ASXCode=RIO)
Appendix G: Competitors
Rio Tinto (continued)
From the tables, Rio Tinto's main revenue stream is from iron ore and followed by copper. Their main exports are to China, followed by North America.
In September 2007, BHP proposed a share swap deal worth $140 million with Rio Tinto; but was rejected by latter, saying that it undervalues its prospects. Rio Tinto says that it does not need BHP's offer as it has plan to double their iron ore output by 2018, raise its dividend and generate at least $15 billion from asset sales. BHP believes that the demand growth for their major commodities should remain robust, and expects the industrialisation of China to drive strong demand in growth in the longer term. In February 2008, BHP formalise a hostile bid of $147.4 billion, but was rejected again by Rio Tinto, saying that it undervalued the firm.
BHP's offer to take over Rio Tinto has raised concerns in the steel industry around the world, and was strongly opposed by China, the biggest importer. They feared that the combined company would have too much control over the supply of raw materials. The Chinese mining firm Chinalco teamed up with US aluminium giant Alocoa to buy a 9% stake in Rio Tinto for $14.05 billion, attempting to block BHP's effort to take control of Rio Tinto, becoming the world's dominant supplier of iron ore to steelmakers. In November 2008, with objections from European Commission on the deal, BHP announced that it is dropping the bid.
In June 2009, BHP and Rio Tinto signed a Framework Agreement to establish an iron ore production joint venture combining the operation and management of their respective Western Australian iron ore production assets. This has raised concerns again by the steel makers in Asia, arguing that a combination would lead to a monopoly supplier even though the two companies have agreed to market their ore separately. China has also started an anti-monopoly review on the this proposed iron ore joint venture, which has lead to growing tensions over pricing. With oppositions, the joint venture was delayed till date.
Appendix G: Competitors
Rio Tinto (continued)
Rio Tinto Income Statement All numbers in thousands
Source: Yahoo! Finance (http://finance.yahoo.com/q/is?s=RTP+Income+Statement&annual)
Appendix G: Competitors
Vale S.A.
The second largest mining company in the world, headquartered in Brazil and operating in more than 35 countries. Vale specializes in mining iron ore, nickel, copper, coal, bauxite, alumina, aluminum, potassium, kaolin, manganese, ferro-alloys, cobalt, platinum-group metals and precious metals. Besides mining industry, Vale also operates in the logistics, energy and steelmaking sectors.
Gross Revenue By Product
Source: Vale S.A. Fact Sheet (http://www.vale.com/en-us/investidores/perfil-vale/fact-sheet/Documents/factsheeti.pdf)
Specialising in mining, Vale has announced recently its hopes to form a new company Vale Fertilizantes SA, by consolidating its fertilizers empire in a restructuring of some operations. This year, Vale will boost exports more than 20 percent to almost 280 million tons, and will likely take 28 percent of the iron-ore market.
Appendix G: Competitors
Vale S.A. (continued)
Vale S.A. Income Statement All numbers in thousands
Source: Yahoo! Finance (http://finance.yahoo.com/q/is?s=VALE+Income+Statement&annual)
Appendix G: Competitors
Comparing BHP with Competitors
BHP is the largest mining company in the world. The mining companies followed behind BHP are Rio Tinto and Vale S.A. These three companies' main source of revenue is from iron ore.
RTP = Rio Tinto Plc
BHP = BHP Billiton Ltd
VALE = Vale S.A.
Industry = Steel & Iron
Source: Yahoo! Finance (http://finance.yahoo.com/q/co?s=RTP+Competitors) extracted on 19 September 2010.
From the income statement of Rio Tinto and Vale, it shown that they are not doing well as compared to the previous years, which could be due to the financial crisis. Based on the table above, BHP is doing way better than its major competitors and the industry average whether in terms of its market capitalisation or revenue. The oppositions from steel makers when BHP's attempted to take over and joint venture with Rio Tinto, shown that they are afraid that BHP would get stronger and monopolise the industry, thus controlling the price of the commodities. It is proven that BHP, in terms of financial statement and expected future growth, still stands above its competitors.
Appendix H: News and Announcement
BHP results underline financial strength
, the Anglo-Australian miner that last week launched a for Canada’s , has reported its second best full-year net profit on record fuelled by strong growth in earnings from its petroleum and base metals operations.
The Melbourne-based miner, the world’s biggest, underlined its financial clout when it said on Wednesday that it generated $17.9bn in cash flow from its operations, with net debt falling to $3.3bn and a gearing ratio of 6 per cent.
Profits on a pre-tax basis rose from $11.6bn to $19.6bn in the year ended June on revenues that increased from $50.2bn to $52.8bn. After-tax profits grew from $5.9bn to $12.7bn, falling short of forecasts of around $13.3bn.
Marius Kloppers, BHP chief executive, said that PotashCorp, the world’s largest fertiliser group, was a “perfect fit” for the miner and that BHP is planning an investor road show to outline the deal’s merits to shareholders.
“The bid that is on the table, while full and fair, is at a level that is attractive for Potash shareholders,” Mr Kloppers said. He noted speculation of rival bids but said no others had materialised, and added that he would “remain as disciplined as ever” in his pursuit of PotashCorp.
BHP’s solid balance sheet, the strongest in the industry, will be if it needs to ward off rivals making counter offers for PotashCorp.
PotashCorp has said it is in about alternative proposals but a number of BHP’s rivals rumoured to be interested in PotashCorp – including of Brazil and – have played down those suggestions.
Tom Albanese, Rio chief executive, all but ruled out a bid for the Canadian group when he met with analysts in Australia on Tuesday. One analyst at the meeting said Mr Albanese emphasised Rio’s focus on organic growth and that any acquisitions would be of a “small to moderate size”.
BHP of the miner overpaying for PotashCorp. BHP has offered $130 a share but PotashCorp investors have indicated that $150-$160 a share may be necessary to win a board recommendation. BHP’s move to diversify into a relatively new business area is another area of concern to investors.
Some investors had also hoped that BHP would return surplus capital to shareholders via share buy-backs in a move that would also lift earnings per share.
BHP’s petroleum division, its third most profitable, generated underlying earnings of $4.6bn, up 12 per cent, while base metals rose nearly 260 per cent to $4.6bn.
Iron ore earnings declined by 4 per cent to $6bn, a reflection of lower prices over part of the year, while metallurgical coal fell 56 per cent to $2.05bn.
BHP’s attributable profit, excluding exceptional items, was $12.5bn, at the low end of some estimates, compared with 2008-09’s $10.7bn and a record figure of $15.4bn in 2007-08.
Fully diluted earnings per share rose from 105.4 cents to 227.8 cents.
BHP’s Australia-listed closed 10 cents lower at A$ 37.44. In London trading the shares rose 15p to £18.18.
The Financial Times Limited 2010. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.
Source:
Appendix H: News and Announcement
Hyundai Steel and BHP Billiton sign an eight year supply contract to deliver 22 million tonnes of iron ore from 2009
10 September 2009
Today delegations of Hyundai Steel and BHP Billiton have signed an eight year supply contract to deliver 22 million tonnes of iron ore from 2009.
Hyundai Steel is the world's second largest electric arc furnace steelmaker. Hyundai is building an integrated steel works at Dangjin with annual capacity of eight million tonnes of crude steel and will operate the first blast furnace plant from January 2010.
BHP Billiton is the world's largest diversified natural resources company and the third largest seaborne iron ore supplier. BHP Billiton has financial strength through the strong cash flow and balance sheet, a diversity of products and customers, access to global capital markets and an enviable platform of growth opportunities.
Mr. Y C Woo, President of Hyundai Steel, said that following the long term coking coal supply contract last year, this is a further confirmation of the strong relationship with BHP Billiton. Hyundai Steel now have secured a total of 13.6 million tonnes of iron ore, which is enough to operate the integrated steel works with eight million tonnes of annual crude steel production capacity by signing with BHP Billiton.
Mr Tom Schutte, President Marketing of BHP Billiton said "I am very pleased that we continue to strengthen our relationship with Hyundai Steel following the long term coking coal supply contract last year. Although all commercial terms of the contract remain confidential as per the contractual agreement, we are pleased to see that the contract satisfies each company's interest."
Source:http://www.bhpbilliton.com/bb/investorsMedia/news/2009/hyundaiSteelAndBhpBillitonSignLongTermIronOreSupplyAgreement.jsp
BHP Billiton Celebrates The Opening Of The 'Newman Mining Hub'
4 November 2009
BHP Billiton today celebrated the official opening of the 'Newman Mining Hub' at its Western Australia Iron Ore operations.
The Hub will be the centre of the Western Australia Iron Ore operations' mining, crushing and screening activities in the Eastern Pilbara. It is the key component of the company's Rapid Growth Project 4 (RGP4), which will increase installed capacity across BHP Billiton's Western Australia Iron Ore operations to 155 million tonnes per annum. The additional capacity associated with RGP4 will be ramped up during 2010.
The Minister for Mines and Petroleum, The Honourable Norman Moore MLC, welcomed the official opening of the Hub.
"The investment made by BHP Billiton in RGP4 further underpins the importance of the Pilbara region to Western Australia's resources industry and to the Australian economy," he said.
BHP Billiton Iron Ore President, Ian Ashby, said the Newman Hub was a key component of RGP4 and would deliver large-scale benefits to the company, its customers, employees and the local communities of Port Hedland and Newman.
Appendix H: News and Announcement
"The commissioning of the Newman Mining Hub marks the beginning of an exciting time for our business, with one of our largest expansion projects nearing completion. The further integration of our mine, rail and port facilities will ensure greater efficiency in production across our Western Australia Iron Ore business, which in turn is good news for our shareholders, customers and employees.
"We are pleased that the community of Port Hedland will also benefit through significantly reduced dust emissions as we move some of our key production processes inland to the Newman Mining Hub," he said.
The introduction of the Newman Hub will mean that the company's Mt Whaleback iron ore operation will be equipped to mine, crush and screen the ore at site rather than those processes taking place in Port Hedland before the product is shipped from Port Hedland.
BHP Billiton's partners in the Western Australia Iron Ore operations are Itochu Minerals & Energy of Australia Pty Ltd, Mitsui-Itochu Iron Pty Ltd and Mitsui Iron Ore Corporation Pty Ltd.
Source:http://www.bhpbilliton.com/bb/investorsMedia/news/2009/bhpBillitonCelebratesTheOpeningOfTheNewmanMiningHub.jsp
BHP approves Brazil refinery expansion
BHP Billiton Ltd has ticked off on its share of the expansion of the Alumar alumina refinery in Brazil even though it says the cost of the project has increased by 30 per cent.
The refinery is a joint venture, with BHP Billiton holding 36 per cent while Alcoa World Alumina and Chemicals (AWAC) has 54 per cent and Alcan the other 10 per cent.
The joint venture partners have been calling the expansion a $US1 billion ($A1.35 billion) project, with BHP Billiton valuing its share of the costs at about $US400 million ($A540.91 million).
But as it announced on Tuesday that it had given the project the green light, BHP Billiton said its share of the costs had now increased 30 per cent to $US518 million ($A700.47 million).
"The current capital estimate has been influenced by the strengthening of the Brazilian currency and the impact of recent cost pressures associated with raw materials and labour which have impacted the development market globally," a BHP Billiton spokeswoman said.
The miner says 55 per cent of the increase is due to cost pressure and 45 per cent due to the appreciation of the Brazilian Real.
The decision to go ahead underlines BHP Billiton's confidence in the strength of demand for alumina and aluminium.
The world's biggest miner has said it expects global primary aluminium demand to increase from 32 million tonnes a year now to 42 million tonnes by 2010 and 50 million tonnes by 2015.
BHP Billiton's president of aluminium Alex Vanselow said the Alumar expansion would allow the miner to meet the increasing demand.
"This expansion is consistent with our strategy of focused investment in high quality and low cost alumina capacity," he said.
"The expansion enhances BHP Billiton's long alumina position enabling us to meet increasing market demand for alumina."
BHP Billiton shares closed up 23 cents at $22.10 on Tuesday.
Source: '
Appendix H: News and Announcement
First production from the expansion of the Alumar alumina refinery in Brazil
MAIN FACTS:
-The project, which involved upgrading the existing plant to eliminate bottlenecks and adding an extra line, is now more than 98% complete.
-Full mechanical completion is expected in September and the final ramp-up to full production will by the second half of the year.
-The upgrade and expansion project will increase the output of the refinery by 2.0 million tons, from 1.5 million metric tons to a total production capacity of 3.5 million metric tons per year for the Alumar Consortium.
-The Alumar Consortium is owned by Alcoa (54% share), BHP Billiton (36%) and Rio Tinto Alcan (10%).
Source: http://www.tradingmarkets.com/.site/news/Stock%20News/2412120/
BHP Billiton acquires Athabasca Potash in Canada
23 March 2010
BHP Billiton Canada Inc. (BHP Billiton) today announced that it has completed the previously announced acquisition, pursuant to a Plan of Arrangement, of all the issued and outstanding common shares of Athabasca Potash Inc (API) for C$8.35 cash per common share.
This acquisition provides BHP Billiton with 100 per cent control of the Burr project and various additional potash exploration properties in Saskatchewan, Canada. BHP Billiton now has access to a total of more than 14,000 km² of prospective exploration ground in the world-class Saskatchewan potash basin.
BHP Billiton also announced that an application to delist API's common shares has been filed with the Toronto Stock Exchange and the delisting is expected to be effective within three trading days of filing. An application has been filed to allow API to cease to be a reporting issuer under applicable Canadian securities laws, and relief is expected to be granted before the end of March.
Source:http://www.bhpbilliton.com/bb/investorsMedia/news/2010/bhpBillitonCompletesTheAcquisitionOfAthabascaPotashInc.jsp
Appendix H: News and Announcement
BHP Billiton Enters Into a Joint Venture For Its Indonesian Coal Project (Maruwai)
31 March 2010
BHP Billiton has today announced it has entered into binding agreements to create a new joint venture for its Indonesian Coal Project (ICP) with a subsidiary of PT Adaro Energy TBK (Adaro), which has agreed to acquire a 25 per cent interest in the ICP joint venture. BHP Billiton holds the remaining 75 per cent.
The ICP covers seven Coal Contracts of Work (CCoWs) located in East and Central Kalimantan in Indonesia. Undeveloped metallurgical and thermal Coal Resources are estimated at 774 million tonnes. Adaro is Indonesia’s second largest thermal coal producer and has operations near the ICP.
BHP Billiton President Metallurgical Coal, Hubie van Dalsen, said, “These agreements with Adaro provide a strong local partner to ensure the successful development of our world class metallurgical coal interests in Indonesia. As we progress development, we will continue our strong commitment to the protection of the region’s outstanding biodiversity.”
Completion of the transaction is subject to approvals from the Indonesian Government
Source:
Minerals Exploration
Grassroots exploration continued on copper targets in Chile and Zambia; nickel targets in Australia; manganese targets in Gabon; and diamond targets in Canada. Exploration for iron ore, coal, bauxite and manganese was undertaken in a number of regions including Australia, South America, Russia and West Africa.
During the quarter, the announced acquisitions of United Minerals Corporation NL and Athabasca Potash Inc. were completed. In addition, BHP Billiton entered into binding agreements with a subsidiary of PT Adaro Energy TBK(Adaro) to create a new joint venture for the Indonesian Coal Project (ICP). Subject to approvals, Adaro will acquire a 25 per cent interest in the ICP joint venture.
For the nine months ended ended 31 March 2010, BHP Billiton spent US$346 million on minerals exploration, of which US$315 million was expensed
Source:http://bhpbilliton.com/bbContentRepository/docs/explorationAndDevelopmentReportForTheQuarterEnded31March2010.pdf
Appendix H: News and Announcement
The Bid for Potash
BEIJING – China is closely watching global miner BHP's $38.5 billion bid to acquire one of the world's biggest producers of potash and fertilizer, the government said Wednesday in its first official comment on the proposed takeover.
Beijing is uneasy about seeing BHP Billiton Ltd., already a major iron ore supplier to Chinese steelmakers, gain control of Potash Corp. of Saskatchewan, expanding its control over key commodities that China needs. Potash, a mineral, is used to make fertilizer
BHP is hoping to profit from what it expects will be rising fertilizer demand in China and India _ the main markets for potash, along with the United States and Brazil
Source:
Vale to Grab Ore Share From BHP, Rio as Demand Surges
By Diana Kinch - January 18, 2010 07:20 EST
Jan. 18 (Bloomberg) -- , the world’s biggest iron- ore miner, may win back market share from rivals BHP Billiton Ltd. and Rio Tinto Group because it can boost exports faster as demand for the steelmaking raw material surges to a record.
Vale will likely take 28 percent of the iron-ore market this year, the most since 2007, when its rose 88 percent, according to Barclays Capital analyst . Output may rise 24 percent to 313 million tons as it expands existing mines and restarts shuttered plants, Credit Suisse said.
Source:
Appendix H: News and Announcement
April 5, 2010
By Horacio R. Marquez, Contributing Editor, Money Morning
First, let's talk about policy. Immediately following the 2008 financial crisis, the Group of 20 (G20) countries agreed to stimulate their economies simultaneously. And, while the emerging economies almost unanimously have already returned to strong rates of growth, most advanced economies are just now turning the corner.
That means any premature action taken by the U.S. Federal Reserve and other central banks around the world - such as the European Central Bank (ECB), the Bank of England (BOE), and the Bank of Japan (BOJ) - to raise interest rates or tighten policy could lead to a potentially devastating deflationary spiral.
That's why these institutions will continue to employ "reflationary" policies - policies that stimulate their economies and inflationary forces.
Now, as far as demand is concerned, India and China have already roared back from the brink and begun to restock their depleted supplies. Economic activity in these countries, as well as accelerating growth in other emerging markets like Brazil, has resulted in increased demand.
As a result we have seen the prices of commodities zoom up from their financial crisis lows. Spot prices of iron ore, copper, and coking coal have more than doubled in price.
Demand for commodities is projected to continue to grow strongly for many years. And tragically, in addition to the standard global demand - which is being fanned by loose monetary and fiscal policies - there is new demand from reconstruction efforts in Chile and Haiti. These two countries will take years to rebuild. In Chile alone, the price tag is $30 billion.
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BHP predicts booming demand in China, India
The world's biggest miner BHP Billiton on Wednesday said key market China was well on the road to economic recovery and would underpin a boom in resources demand in coming decades.
Chief commercial officer Alberto Calderon said China's growth recovery was "gaining momentum" and the worst of the global downturn appeared to be over in the developed nations.
"China looks good, India looks OK, and with the OECD the worst is over, but how quickly it will get better is the question," Calderon said in a briefing to analysts.
BHP expected global steel demand to double in 15 years, with China remaining a key market for iron ore, while demand growth for coking coal would come from both China and
So far in 2009 China had jumped from producing 37 percent of the world's crude steel to 49 percent, said BHP analyst Vicky Binns.
"By 2025 we believe Chinese and other emerging nations' demand could push seaborne iron ore demand up 250 percent from current levels," she said.
Appendix H: News and Announcement
India and would underpin a boom in energy demand over the next two decades, said petroleum marketing chief Mike Henry, who predicted a surge of nearly 40 percent.
"Over the next two decades China and India alone will account for over half the world's incremental electricity demand," Henry said.
BHP said stalled iron ore price talks had not resumed, and negotiations were yet to begin for 2010 rates.
Marketing president Tom Schutte said BHP would happily move away from the benchmark system to indexed pricing over time, and predicted benchmarking days were numbered.
"The evolution to flexible, floating price mechanisms we believe is already happening," Schutte said.
"We remain totally committed to implementing this across our suite of products as far as possible," he added.
BHP has previously said more transparent iron ore pricing could help prevent situations such as the arrest of Rio Tinto executive Stern Hu in China on allegations of industrial espionage.
Hu, an Australian , was Rio's lead negotiator during this year's fraught benchmark talks, and his arrest was seen by some as a sign of China's frustrations with the negotiations.
Rio, the world's second-largest producer of iron ore, has long been a backer of the decades-old benchmark system, under which the first price agreed between a miner and steelmaker becomes an industry standard for the next 12 months.
Souce:http://www.terradaily.com/reports/BHP_predicts_booming_demand_in_China_India_999.html
Mining industry faces 'tough road ahead' – PwC
By Liezel Hill 30 June 2009
TORONTO (miningweekly.com) – Mining companies have some difficult decisions to make if they are to reduce costs and protect margins in the prevailing economic environment, professional services group PricewaterhouseCoopers (PwC) said in a report published on Tuesday.
"There is no doubt that the industry is facing a tough road ahead," said PwC US mining leader Steve Ralbovsky.
"Reducing capital and operating expenditures and managing production levels to ensure they operate at the lowest possible cost will be crucial for mining companies wanting to combat the current economic conditions.
“However, given the long-term nature of mining projects and associated capital commitments, it may be difficult for companies to drastically reduce costs in the short term."
In the report, titled 'Mine – When the going gets tough', PwC analysed the financial performance of the global mining industry and examined current trends in the industry, looking at the top 40 global mining companies by market capitalisation.
Interestingly, despite the economic downturn in the fourth quarter of 2008, mining companies still increased revenue 23% year-on-year in 2008, in what PwC calls “a year of two parts”.
However, operating costs continued to rise at a greater rate than revenue and net profit fell 14% compared with 2007.
The market capitalisation of the top 40 mining companies plunged a whopping 62% in 2008 compared to the S&P 500, which declined 38% over the same period.
“Shareholders lost confidence in the economy and the industry and share prices plummeted,” PwC said.
Still, despite the sharp decline, the overall level of market capitalisation is still above that recorded in 2005, which, at the time, was seen to be a 'spectacular year'.
Further, while the mining sector may not have anticipated the sharp decline, “the response has been rapid and decisive,” the report said.
Overall, 14 of the top 40 announced mine closures, production cuts or moves to place mines on care-and-maintenance during the first quarter of this year, while another $13-billion of capital expenditure has also been deferred or cancelled.
Combined, this has led to more than 40 000 planned redundancies across the industry.
However, it is likely that companies will need to take further steps to put a lid on costs.
“The short-term outlook for mining looks bleak, and without management intervention margins will be quickly eroded,” PwC said.
“Most indicators point toward a tough period for the industry as the short-term issues dominate the agenda.”
Ultimately, success in the long term will depend on how the mining industry reacts “when the going gets tough”.
Predictably, gold companies fared the best during 2008, with market capitalisation in the sector only aupwards.
Gold miners now comprise 26% of the total market capitalisation of the top 40, more than double the 2007 level.
Four gold companies are now in the top 10, with Goldcorp and Newmont up from fifteenth and seventeenth respectively, while Kinross Gold’s market capitalisation remained steady over 2008, moving the Toronto-based company from twenty-fifth to tenth place, making gold the most represented commodity in the top 10.
The biggest gold producer by market capitalisation and production is Canada's Barrick Gold.
Overall, at December 31, 2008, diversified Anglo-Australian giant BHP Billiton was the biggest miner by market capitalisation, followed by Brazil's Vale, Chinese group Shenhua and Rio Tinto, Barrick, Anglo American, Goldcorp, Newmont, India's NMDC and Kinross, respectively.
Source:
Appendix H: News and Announcement
Same old angst over mining tax
Colin Brinsden September 8, 2010
Treasurer Wayne Swan always looked to be facing an uphill struggle with Labor's proposed mining tax, but now with the slimmest government majority on paper, the task just got harder.
Day one back in the saddle proper and the 30 per cent minerals resource rent tax (MRRT), and Mr Swan, were quickly under fire from all quarters.
Mining shares sank, business groups want the tax blocked, small miners want it scrapped and the Greens want it beefed up.
Regardless, Mr Swan wants the mining tax legislation drafted as quickly as possible, rather than delay it until the second half of 2011 when a more favourable Senate is in place.
"There's no notion in my mind of delaying the considerations that are so important to this tax until we get a change in the Senate, just none," he told reporters in Canberra on Wednesday.
Prime Minister Julia Gillard in July negotiated the 30 per cent MRRT with three major miners, ditching the even more controversial 40 per cent resources super profits tax (RSPT) when former prime minister Kevin Rudd was dumped.
Still, the MRRT left many small and mid-tier miners unhappy.
The final design of the tax will follow a consultation process led by former BHP Billiton chairman Don Argus, which has not been operational during the government's caretaker period.
"I would like to get this into legislative shape as quickly as we possibly can," Mr Swan said, adding the government to some extent was in the hands of the Argus committee.
There was some confusion as to whether independent Tony Windsor wanted the tax discussed at a planned summit to discuss the Henry tax review.
He, and fellow independent Rob Oakeshott, won support for the summit in return for backing a Labor minority government.
"Tony has some views and wants to be consulted on the MRRT and would in normal course of events anyway, irrespective of anything we've agreed to," Mr Swan said.
Mr Windsor subsequently confessed to reporters that he was talking at cross purposes in terms of the review, and meant the "Argus review".
"But that doesn't mean that the concept of a rent resource tax won't be looked at by the Henry review (summit)," he said.
The two independents are supportive of a mining tax, but one more like that recommended by the Henry review that would replace royalties, rather than the MRRT that runs alongside them.
Association of Mining and Exploration Companies (AMEC) chief executive Simon Bennison said while he was prepared to work with the government, it would have been easier if the coalition had won and scrapped the tax.
"We would still like that to happen and start again afresh," Mr Bennison told Sky News, adding that he has written to the independents putting forward the industry's case.
Australian Chamber of Commerce and Industry (ACCI) chief executive Peter Anderson wants the independents to vote against the tax unless more changes are made to the 30 per cent impost.
Appendix H: News and Announcement
"They should not pass the mining tax legislation unless there is a stronger program of tax reform that is attached to it," Mr Anderson told reporters in Canberra.
He said it should go beyond redistributing the mining tax into small changes to company tax rates, and the summit should also examine the GST, payroll tax and capital gains tax.
Greens leader Bob Brown said his party still preferred the original 40 per cent tax on miners, but realised moves to change it would not succeed.
"I'm simply being pragmatic here, we do not have the numbers," Senator Brown told reporters in Canberra.
Mining shares, which had rallied on the first trading following the election in the belief the coalition would secure power, sank on Wednesday, with BHP Billiton and Rio Tinto both nearly 1.5 per cent lower.
Source:
Windsor at odds with Labor over mining tax review
September 8, 2010
A key independent MP already appears to be at odds with federal Labor, less than 24 hours after it secured his support for Australia's first minority government in 70 years.
Tony Windsor announced his decision to support Labor yesterday, giving the party one of four crossbench votes it needed to form government.
However, the Gillard government's tenuous relationship with the country independent has hit a snag over Labor's proposed 30 per cent mining tax.
Mr Windsor wants the minerals resource rent tax to be discussed at a tax summit next year, which was one of Labor's many offerings to win over the independents.
But Treasurer Wayne Swan today said the tax would not be on the summit's agenda because the government was in the process of designing the measure and preparing legislation for parliamentary approval.
"That's the first time I've heard of that," Mr Windsor told ABC Radio in response to the mining tax's omission.
"I thought it was going to be included in any discussions in relation to taxation and the Henry review."
But Mr Swan told the ABC: "I am involving all members of the Parliament, including the independents, in the discussion."
Mr Swan said Labor was committed to the tax, and a panel chaired by former BHP Billiton chairman Don Argus was looking at it in greater depth.
"Tony Windsor and the independents will have views about the design of that tax, which they can express to the government but we have to move forward with legislation."
The opposition says the agreement that secured a Labor minority government had failed at the first hurdle.
"Labor is already sliding away from the deal they made with the country independents," opposition frontbencher Christopher Pyne told ABC Radio.
Appendix H: News and Announcement
Mr Swan later told reporters in Canberra he had held productive talks with Mr Windsor about the tax in the past.
"Tony has some views and wants to be consulted on the MRRT and would [in the] in normal course of events anyway, irrespective of anything we've agreed to," he said.
Mr Swan acknowledged the government needed to win over key crossbenchers in both houses of Parliament to have the tax enacted.
He also said he would not prevent recommendations from the Henry tax review that were previously rejected by the government from being discussed at the summit.
Any new legislation, especially as important as the MRRT, involved a process that took some time and rarely less than six months, Mr Swan said.
"Whether it can be done and into legislative form at the end of this year, I couldn't tell you."
With the government still in caretaker mode, the Argus committee has not been operating fully but it could now restart.
"To some extent we are in the hands of the time that the Argus committee takes," Mr Swan said.
"But we will be seeking to do it as quickly as we can consistent with making good public policy."
There would be extensive public consultation as a matter of course.
Mr Swan rejected suggestions that most of a $10 billion deal Labor negotiated with the country independents in return for their support would come from tax.
Nationals’ leader Warren Truss has claimed about $6 billion would come from the mining tax.
"Fair dinkum, when it comes to numbers you can't listen to the Liberal Party or the National Party," Mr Swan said, adding that only $500 million would be funded from the tax.
Mr Swan said he did not plan to put off introducing legislation for the tax until the second half of next year, when the Senate would be more favourable for Labor.
Until then, Family First Senator Steve Fielding and the Coalition would be able to block the new resources regime.
"I would like to get this into legislative shape as quickly as we possibly can," he said.
"There's no notion in my mind of delaying the considerations that are so important to this tax until we get a change in the Senate, just none."
Source:
Appendix I: References
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Appendix I: References
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