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Mining.com – Iron ore price extends rally as market focus shifts to output reports

Iron ore prices in Asia pushed higher on Monday as strong global steel demand buoyed sentiment, and as Chinese steel mills continued to ramp up output despite the government’s scrutiny of their compliance with stricter anti-pollution rules.

“Booming steel production continues to support the iron ore market,” analysts at ANZ told Reuters.

The metal price hit a 10-year high last week, with Benchmark 62% Fe fines imported into Northern China (CFR Qingdao) changing hands for $178.43 a tonne on Friday.

The most-traded September iron ore on China’s Dalian Commodity Exchange ended the daytime trading session on Monday 0.8% higher at 1,060 yuan ($162.70) a tonne, rising for a third consecutive session.

“Increased scrutiny on emissions is forcing steel mills to use higher-grade iron ore, which is well compensated by strong steel margins,” ANZ analysts said.

Global steel demand will rise by 5.8% this year as economies recover from the COVID-19 pandemic, the World Steel Association said last week, though it painted a cautious outlook for 2022 as the impact of stimulus spending diminishes.

On the supply side Vale, Rio Tinto and BHP are due to report production data this week as well as give market outlooks.

Link here to view the full article

Cadence Iron Ore Update – Record Iron Ore production recorded by BHP in latest Operational Review


Our highest priority is the safety, health and wellbeing of our workforce and communities. We have taken action to reduce the spread of COVID-19.


  • Our financial position is strong. Underpinned by our low-cost operations, our business is resilient and expected to continue to generate solid cash flow.
  • Record production was achieved at Western Australia Iron Ore (WAIO) and Caval Ridge, while record average concentrator throughput was delivered at Escondida and record ore was stacked at Spence.
  • Production guidance for the 2020 financial year remains unchanged for petroleum, iron ore and metallurgical coal. Copper guidance for our operated assets is broadly unchanged and Antamina guidance is under review following temporary suspension of operations due to COVID-19. Energy coal production guidance is under review with Cerrejón placed on temporary care and maintenance due to COVID-19.
  • Our major projects under development in petroleum and iron ore are tracking to plan. As a result of measures put in place to reduce the spread of COVID-19, the Spence Growth Option schedule and timing for completion of the shafts at Jansen are under review.
  • We have flexibility in our capital and exploration expenditure. We are reviewing our guidance for the 2021 financial year and it will be lower than the current guidance of around US$8 billion. We will provide updated guidance with our full year results.

Iron ore – Total iron ore production increased by three per cent to 181 Mt (205 Mt on a 100 per cent basis). Guidance for the 2020 financial year remains unchanged at between 242 and 253 Mt (273 and 286 Mt on a 100 per cent basis).

Western Australia Iron Ore (WAIO) achieved record production, with higher volumes reflecting record production at Jimblebar and the impact of the train derailment in the previous period. Weather impacts from Tropical Cyclone Blake and Tropical Cyclone Damien were offset by strong performance across the supply chain, including improved car dumper reliability, with completion of a major car dumper maintenance campaign in October 2019, implementation of improved maintenance strategies, and delivery of consistent performance across our mine operations. This strong performance has resulted in healthy stock levels across our mines.

Consistent with our revised mine plan, Jimblebar fines Fe grade has improved during the March 2020 quarter, with the typical specification expected to return to above 60 per cent in the June 2020 quarter.

WAIO continues to focus on operating safely and has incorporated a series of preventative measures to help reduce the spread of COVID-19. We have reduced the number of workers on our sites, with those not critical to operations working from home. To meet border controls introduced by the Western Australian Government, over 900 employees and contractors in business critical roles have been temporarily relocated to Western Australia, including the majority of specialist roles who are based interstate, such as train drivers and train load out operators.

Mining and processing operations at Samarco remain suspended following the failure of the Fundão tailings dam and Santarém water dam on 5 November 2015. Approval of the Corrective Operating Licence (LOC) for Samarco’s operating activities at its Germano Complex was received in October 2019. As a result of precautions taken for COVID-19, operation readiness activities for restart have been slowed, with only critical activities being undertaken. Restart can occur when the filtration system is complete and Samarco has met all necessary safety requirements, and will be subject to final approval by Samarco’s shareholders.

The South Flank project is tracking well and remains on schedule for first production in the 2021 calendar year. As at the end of March 2020, approximately 80 per cent of the contracts awarded are being performed in Australia, of which 95 per cent is within Western Australia. Some interstate employees have relocated to Western Australia to help with the project delivery. Consistent with our operations, the South Flank project continues to implement increased measures to conduct safe operations in compliance with strict health and travel guidelines put in place to help reduce the spread of COVID-19.



#KDNC – Supply Disruptions Raise Morningstar Near-Term Iron Ore Price Forecasts


Near-term tightness in the iron ore market has persisted and intensified, with several developments in Brazil further restricting  Vale’s (VALE)supply and Cyclone Veronica off Australia interrupting Pilbara shipments. We’ve factored in a reduction of another 20 million tonnes in Vale’s output in 2019 and 10 million tonnes in 2020. We now expect Vale to produce 350 million tonnes in 2019 and 370 million tonnes in 2020, down from an estimated 390 million tonnes in 2018. For  Rio Tinto (RIO),  BHP (BHP), and Fortescue, we’ve lowered our forecasts by 10 million tonnes in total for 2019 due to the cyclone. The estimated 30 million tonnes of lost supply from Vale and the Pilbara in 2019 is a more than 1% reduction to the seaborne iron ore market.

Disruptions mean that higher-cost iron ore is needed to balance the market, such as from domestic mines in China. The iron ore price has averaged $83 per tonne year to date, well ahead of our prior $65 per tonne forecast for 2019. Accordingly, we are raising our near-term iron ore forecasts to $73 in 2019, $60 in 2020, and $50 per tonne in 2021. Our prior forecasts were $65 in 2019, $55 in 2020, and $40 per tonne in 2021. Our unchanged $40 per tonne long-term forecast now starts a year later, in 2022.

All major iron ore miners we cover benefit from the higher price forecasts, including Vale. However, for Vale, there’s uncertainty around the cost to rectify the Feijao dam failure and compensate the victims as well as legal action that may affect the operation of other mines. Fortescue benefits most because it’s an iron ore pure play and has lower margins than BHP or Rio Tinto, which brings greater leverage to the price.

We’ve not changed our $40 per tonne long-term forecast, given the relative flatness of the iron ore cost curve inside the steep tail of smaller-scale and marginal producers, most which we eventually expect to exit. Disruptions to Vale’s supply should resolve within the next few years. In terms of iron ore supply additions, the lost output from Vale, including Samarco, should come back in the medium term. The S11D project should also expand to reach capacity over the next few years. BHP and Rio Tinto should grow modestly as those companies reach their installed capacities.  Anglo American’s (NGLOY) Minas Rio mine in Brazil should add more than 20 million tonnes per year after being shut to rectify slurry pipeline leaks. Most of the additional output from Anglo will come in 2019. From a disrupted 2019 base of about 350 million tonnes, we expect Vale’s output to grow to around 425 million tonnes a year from 2023…..

Link to Morningstar for full article here

Ian Pollard – Persimmon Homes #PSN strong performance to continue in H2

Persimmon Homes plc PSN proclaims that strong results for the half year to the 30th June reflect the continued successful delivery of the Group’s long term strategy. Profit before tax and basic earnings per share both rose by 13%, group revenue by 5% and new home sales by 4%. Forward sales are 6% ahead of last year and expectations are that results for the second half year will also be strong.

BHP Billiton plc BLT is paying a record final dividend of 63 cents per share, making a total payout for the year 118 cents, a rise of 42%, for the year to the 30th June, reflecting. a strong operating performance and well ahead of the minimum permitted payout.. Attributable profit and basic earnings per share both fell by 37% after taking into account exceptional items but on an underlying basis the figures showed rises of 33% each.

Wood Group (John) plc WG enjoyed strong organic growth during its first half to the end of June, with revenue rising by 13.4% and the operating profit rising from $72m to $125. However last years first half profit of $6m. was turned into a loss of $52m due to amortisation charges of $125m and exceptional costs of $101m. Basic earnings per share fell from 1.1c per share to a negative 7.9 cents per share.The interim dividend is to be increased by 2% to 11.3 cents per share. A stronger second half is expected due to project phasing and market recovery.

Angling Direct plc ANG trading in the six months to the 31st July was extremely positive and ahead of management expectations, with a rise of 56%. On a like for like basis sales rose by 4.2%

Tracsis TRCS Group trading for the year to the 31st July has been strong with revenues ahead of market expectations at c. £40m compared to last years £34.5. EBITDA and adjusted profit are also expected to be ahead of market expectations and also ahead of the previous year.

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Reckitt Benckiser – Admits Incapable Of Growth

Reckitt Benckiser RB Rarely has a board been so isolated from reality that it shows not the slightest comprehension of the fear which its own chosen headlines for its third quarter update, could instill in shareholders. Those headlines speak of a continuing challenging environment and then worse still, an admission that the company needs reorganising for growth. So what exactly have the directors and senior management been doing recently to earn their remuneration. How can they have let things get so out of hand that they are forced to admit that the company is so badly organised it is incapable of growth.

Net revenue both for the quarter and for the year to date both fell by 1%. The best it could manage was growth in only one category out of four and that was a lowly 1% in hygiene,  It was a soft quarter bemoans the CEO whose best expectations are for a flat like for like target for the full year, whilst at the same time claiming  to be excited about the prospects for the company.

BHP Billiton BHP updates that its first quarter performance leaves it on track for 7% volume growth in the current financial year but the figures are somewhat patchy. Petroleum and gas production declined compared to the same quarter last year, as did iron ore and coal. Copper was the only bright spot with a rise of 14%. However there are four major projects under development one of which involves investment of $2.5 billion.

Softcat SCT announces another very strong year with double digit growth in both gross and operating profit. Revenue for the year to 31st July rose by 23.8% and operating profit by 18.9%. The final dividend is to be increased by 69.4% and a special dividend of 13.5p per share, down 15% on last year, is also to be paid, making a total dividend increase for the year of 15%. The company has now produced 48 consecutive quarters of top and bottom line year on years growth.

Eckoh ECK has been trading strongly in the UK during the half year to the 30th September, whilst in the US where it only entered the market in 2014 it also appears to be going from strength to strength, having won a total of 30 contracts since then. Good progress is being made in converting its contracts pipeline into orders and new contracts awarded in the first half,  have equaled those awarded in the whole of the last financial. year

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BHP – 2017 Dividends Increased by 177%

BHP Billiton BHP benefited in 2017 from a substantial reduction in exceptional losses which fell from $6.4b in 2016  to $842m. as the Samarco dam failure in Brazil weighed less heavily on the company. The year to the 30th June turned out to be a very strong financial year with free cash flow at $12.b., the second highest on record and net debt down by 37%. On an underlying basis, EBITDA rise by 64%, basic earnings per share by 455% and attributable profit multiplied from $1.2b to $6.7b. Having laid the foundations over the past five years to improve return on capital and grow shareholder value, the momentum will continue into 2018 with volume growth of 7% expected, as well as further productivity gains.

Accordingly shareholders receive their reward with dividends for the year increased by 177% to a total of 83 cents per share.

Wood Group (John) plc WG had a mix of both robust and weaker performances across its businesses in the 6 months to the 30th June. Total revenue declined by 11% but profit was down by 86% and basic earnings per share by 89.0%. The interim dividend is increased cautiously by 3%.

Empresario Group EMR produced a record first half performance with revenue rising by 50% at constant exchange rates and adjusted profit before tax up by 24% or 12% at constant exchange rates. The company has successfully integrated its two acquisitions into the business and see them both offering further opportunities for growth.

Sareum Holdings SAR expects that profit for the year to 30th June and cash at the bank will be ahead of market expectation.

Proactis Holdings plc PHD expects to see a 31% rise in revenue for the year to 31st July, with EBITDA up 43% and profit before tax rising from 3.1m to 5.3m


Quantum Pharma plc QP Revenue for the half year to the 31st July rose by 13% following a strong performance from Niche Pharmaceuticals. Adjusted EBITDA rose by 23% and statutory operating prfit by 74% whilst net debt halved to 11.9m.

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Markets could continue to rise anyway irrespective of referendum result – Brand Communications

Alan Green, CEO of Brand Communications is interviewed by Mike Ingram in the TipTV VIP area at the Master Investor show. Pointing to an impressive recovery in mining stocks in last couple of months, Green said rally in heavyweight stocks like Anglo American (AAL), Rio Tinto (RIO), and BHP Billiton (BLT) were also igniting small miners. Regarding Brexit, Green said markets could continue to rise regardless of the vote and added that he does not see a major sell-off even if Britons vote in favor of Brexit.

Only Miners Buy Mining Machinery – Are Boom Times Returning

On Wednesday, after a one day leap of 4%, iron ore rose to a 10 month high of $64.30 per tonne making a rise of 50% since the beginning of the year and nearly 75% since the mid December lows.

Coking coal is not a glamour commodity by any means but on Wednesday that too reached a year’s high of $95 per tonne whilst steel making coal was up by 30% from its December lows.

Rio Tinto RIO said that the rally in commodities was not sustainable but as we reported on Wednesday RIO’s first quarter growth reached double digit figures with copper up by 27% on the previous quarter.  At the same time BHP Billiton BHP cut its iron ore production target for the first time in fifteen years.

Even silver, which has for a number of years steadfastly refused to perform its expected role as a tracker of gold , has suddenly shot up to become the best performing commodity of 2016, helped by huge demand from hedge funds and Chinese investors. In only eleven days this month the price of silver jumped by by 14%. Hedge funds bullish positions on silver are now at their highest since 2006.  The last time they were so bullish on gold was in 2011 when the price of gold had reached the dizzy heights of $1900 per oz.

The test is not how prices are suddenly emerging from the abyss and soaring onwards and upwards.  Speculation can do all sorts of wondrous things but the real test is whether investment in new projects is following suit and it is. Capital expenditure on new mines has nearly doubled in five months, rising by $50 billion to $108 billion of which a huge $65 billion went on gold and copper mines.

Even rare earths have joined in the party.  China produces 85% of the world’s rare earths and has now concentrated its previously fragmented rare earths industry into 5 enormous new companies.  In the first 3 months of this year shipments of rare earth oxides from China rose by over 100%, with March being the second best month on record.

An almost infallible measure of the health of the world’s mining industry is Caterpillar CAT. Again as we reported last month, Caterpillars sales figures were forecasting a global collapse in mining production and mining activity. In only a few weeks the turn round has been so dramatic that Caterpillar has had to rush out updated figures showing that the rate of decline in machine sales had fallen sharply in all of its markets and that for March they were down by only 13% compared to March last year, whilst the figures for January and February had been down by 21% and 15% respectively. Hedge funds and speculators do not buy mining machinery.  Only miners do that.

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China Slumps Into Growth At Mad Hatters Tea Party

That, dear reader, is what the media, the high flying economists, the serious, oh so serious, news anchormen on Bloomberg and Alice in Wondervision, would have you believe. The Chinese economy is in decline, it is crumbling and look what the decline is doing to the prices of commodities.  They are in free fall, have been in free fall and are going to continue free falling until the Chinese economy starts growing again.


The Chinese economy in 2015 has grown at a rate  which every European and American leader would regard as justification for a national celebration.

The facts are that Chinese growth in fixed investment has fallen to a 15 year low and is expected to come in at 4.5% for 2015. In November credit growth in the Chinese economy fell to 11.8%, close to an all time low – this growth the pundits said caused copper to fall to its lowest since 2009.. Also in November fixed asset investment data was described as damaging, with growth of 10.2%, the lowest for 15 years. As for that bell weather as to the strength of a country’s economy, Chinese passenger car sales, rose by 13% in October.

But the world is now being brain washed to accept that China is to be blamed for the slump in commodities and all the other evils which beset western economies.

The geniuses of the financial columns deliberately ignore the truth because either lies make a better story or there is a huge western conspiracy to cover up the truth. And what is being covered up – it appears to be the fact that nobody has a clue why western economies are in such a mess and commodities are plunging to levels not seen for decades so lets blame the Chinese.

In November amidst all this good news from China, Anglo American (AAL) fell to its lowest since 1999 and fears grew that it would have to cancel its dividend, hedge funds dumped 368 tonnes of gold in 3 weeks, BHP Billiton (BLT) fell to a 7 year low after falling 5.64% in one day. Iron ore fell to a new low of $40 per tonne and then on the 7th December dropped into fantasy land with a further fall to $38.90 compared to $190 per tonne in 2011. Coal became virtually unmarketable as Maggie Thatchers wisdom in decimating the British coal Industry decades ago, became clear for all to see and Moody’s forecast that in 2016 diamond miners would be forced to cut prices even further.

The latest undisputed data from China is that 3rd quarter growth came in at 6.9%, its lowest since 2009 and retail sales in the first 9 months rose by 10.9%. Mouth watering figures by western standards.

The pundits try to make us believe that the main cause of the commodities meltdown is a non existent economic slowdown in China. That can not be true but I wonder what the real cause is.

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Alan Green discusses Scholium Group (SCHO), BHP Billiton (BLT) & Shell (RDSB) on the ADVFN podcast

Alan Green discusses Scholium Group (SCHO), BHP Billiton (BHP) and Royal Dutch Shell (RDSB) with Justin Waite on the ADVFN podcast. Click here for the podcast – the interview with Alan starts approx 1.5 minutes in.

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