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Two-page report if an aggressive takeover should occur on BHP Billiton Ltd

Extracts from this document...

Introduction

Table of Contents Report Overview Of Mining Industries 1 BHP Billiton Group (BHP) 1 Competitors 1 Future Opportunities And Development 1 Tax Issue 2 Recommendation 2 Appendices Appendix A: Overview Of Mining Industries 3 Appendix B: BHP Business Summary 4 Appendix C: BHP Billiton Chronology 5 Appendix D: BHP Annual Summary 7 D1: BHP Annual Per Share Statistics 9 D2: BHP Annual Ratio Analysis 11 D3: BHP Financial Statement Figures and Analysis 13 Appendix E: BHP Customer Sector Group Summary 15 Appendix F: BHP Consumer Demand Growth 18 Appendix G: Competitors 22 Appendix H: News And Announcement 28 Appendix I: References 40 Overview of Mining Industries The worlds' mining industry revived, along with the escalating demands for resources in growing economies countries such as China, Brazil and India. Following the 2008 financial crisis; which affected the worlds' economy and many companies suffered losses during that period, China and India had begun to replenish their depleting supplies. As a result, there is a significant rebound in commodity prices from the record low financial crisis and spot prices of iron ore, copper and coking coal, which have increased in more than expected. In order to keep up with the worlds' future demands for resource materials, an average growth of 6.8 percent is probable five years down the road. Australia is regarded as the world's third largest producer of commodities hence they are nearly self sufficient in most commodities. The positive export demand and investments from China, other parts of Asia and the rest of Europe are the few reasons in which Australia's' economy picked up since 2008 financial crisis, particularly in the mining industries. The mining industry has been a major contributor to the economic growth, and over 7 percent of GDP in Australia serves as an important impetus to the country. As a result, the industry is expected to generate massive revenue of about 19 percent of Australia's GDP, and make up approximately 60 percent of Australia's export earnings. ...read more.

Middle

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 Period Ending Dec 31, 2009 Dec 31, 2008 Dec 31, 2007 Total Revenue 23,311,000 38,509,000 33,115,000 Cost of Revenue 13,621,000 17,641,000 17,336,000 Gross Profit 9,690,000 20,868,000 15,779,000 Operating Expenses Research Development 981,000 1,085,000 733,000 Selling General and Administrative 2,652,000 1,748,000 1,852,000 Non Recurring - 2,204,000 - Others - 1,083,000 - Total Operating Expenses - 6,120,000 - Operating Income or Loss 6,057,000 14,748,000 13,194,000 Income from Continuing Operations Total Other Income/Expenses Net 2,624,000 (1,531,000) 2,039,000 Earnings Before Interest And Taxes 8,681,000 13,217,000 15,233,000 Interest Expense 1,558,000 - - Income Before Tax 7,123,000 13,217,000 15,233,000 Income Tax Expense 2,100,000 535,000 3,201,000 Minority Interest (107,000) (258,000) (802,000) Net Income From Continuing Ops 5,349,000 13,218,000 11,825,000 Non-recurring Events Discontinued Operations - - - Extraordinary Items - - - Effect Of Accounting Changes - - - Other Items - - - Net Income 5,349,000 13,218,000 11,825,000 Preferred Stock And Other Adjustments - - - Net Income Applicable To Common Shares $5,349,000 $13,218,000 $11,825,000 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. BHP RTP VALE Industry Market Cap: 201.85B 109.33B 147.28B 1.34B Employees: N/A 67,876 60,036 5.40K Qtrly Rev Growth (yoy): 38.90% 30.50% ...read more.

Conclusion

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: http://www.theage.com.au/federal-election/windsor-at-odds-with-labor-over-mining-tax-review-20100908-150aq.html Appendix I: References Australia. BHP Billiton. 2010. http://www.bhpbilliton.com/ (accessed September 5, 2010). Brazil. Vale. 2010. http://www.vale.com (accessed September 5, 2010). Australia. Rio Tinto. 2010. http://www.riotinto.com (accessed September 5, 2010). World's Largest Diversified Mining Companies. 2009. MoneyEnergy. http://www.getmoneyenergy.com/2009/10/largest-diversified-mining-resource-companies-stocks/ (accessed September 8, 2010) Australia. 2010. FinAnalysis. http://0-www.aspectfinancial.com.au.prospero.murdoch.edu.au:80/af/finhome?xtm-licensee=finanalysis (accessed September 16, 2010) Australia. 2010. DatAnalysis. http://0-datanalysis.morningstar.com.au.prospero.murdoch.edu.au/af/dathome?xtm-licensee=dat (accessed September 16, 2010) Mine. 2010. PricewaterhouseCoopers. http://www.pwc.com/gx/en/mining/issues-trends/pdf/mine-2010-review-global-trends-mining-industry.pdf (accessed September 9, 2010) Buy, Sell or Hold: BHP Billiton is Poised to Pick Up Big Gains on the Back of a Global Commodities Bull. 2010. Money Morning. http://moneymorning.com/2010/04/05/bhp-billiton-3/ (accessed September 9, 2010) Latimer, Cole. 2010. BHP approves Pilbara expansion. Australian Mining. http://www.miningaustralia.com.au/news/bhp-approves-pilbara-expansion (accessed September, 6 2010) BHP Billiton Exploration and Development Report For The Quarter Ended 30 June 2010. 2010. BHP Billiton. http://www.bhpbilliton.com/bbContentRepository/docs/edReportQuarterEnded30June2010.pdf (accessed September 11, 2010) BHP Billiton Finalises Joint Venture Arrangements for its Indonesian Coal Project. 2010. BHP Billiton. http://www.bhpbilliton.com/bb/investorsMedia/news/2010/bhpBillitonFinalisesJointVentureArrangementsForItsIndonesianCoalProject.jsp (accessed September 6, 2010) BHP Billiton's bid for Rio Tinto: timeline. 2010. Times Online. http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article5228711.ece (accessed September 15, 2010). Rio Tinto boss rejects doubts over BHP Billiton deal. 2010. London Evening Standard. http://www.thisislondon.co.uk/standard-business/article-23869170-bhp-billiton-and-rio-tinto-expect-defeat-in-iron-ore-tie-up.do (accessed September 10, 2010). ...read more.

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