Shareholders in BHP Billiton (BHP) were more interested in the damage the falling iron ore price was doing to the company, rather than what they were told at the company’s Australian annual meeting in Adelaide yesterday.
Global iron ore prices fell to around $US70 – $US70.20, depending on sources and could slide under that important support level tonight.
That saw BHP shares lose 2.6% to close at $31.80, equal to the lowest they have been for than two years. In late trading they hit an intra day low $31.75, which was also the lowest the shares have been for more than two years.
Shares in other iron ore miners also tumbled.
So news that the company planned to ask shareholders next May to approve the $14 billion in spin off of unwanted assets into a new company, failed to impact the share price.
Chairman Jac Nasser told the AGM that the demerger was on track. In effect Mr Nasser yesterday confirmed the timetable BHP had previously said when it indicated shareholders would meet to approve the spin off in the first half of 2015.
BHP has already changed tack on the float and where it will be listed. Shortly after unveiling NewCo in August, BHP added a London listing to those originally announced for South African and Australian listings. Australia will be the primary listing, the others would be secondary.
BHP saw its 2014 profit rise 10% to $US13.4 billion. Reaching that level in the 2015 will be very tough.
Analyst reports suggest sharp falls in commodity prices will see BHP’s earnings fall this year (the fall in iron ore and oil prices guarantee that the drop will be substantial).
That’s despite the miner’s continuing campaign for cost savings and improved productivity at its mines, especially the major assets of iron ore, coal, oil and gas.
BHP 2Y – BHP shares find a two year low
Seeing the AGM was held in Adelaide, BHP talked about the huge South Australian Olympic Dam copper gold uranium project which it was planning to expand dramatically in one giant mine, but called that off as costs rose and prices fell.
The meeting was told that the company was testing new technology that may enable an expansion of its massive Olympic Dam.
The use of heap leaching – a cheaper way of using chemicals to process valuable minerals (and used widely in the gold and copper mining industries around the world) was showing promise, shareholders were told.
CEO Andrew Mackenzie said, ”If heap leaching pilot tests currently underway are successful, and they are showing promise, we will use this technology and phased expansions of the underground mine to further increase Olympic Dam’s output".
BHP cancelled the $30 billion open pit expansion of Olympic Dam in 2012 and has been looking to find cheaper ways of exploiting the huge underground deposits of copper, gold and uranium.
The heap leaching method was settled on earlier this year and BHP indicated that the trial would last until 2019, which will probably see any decision taken by a vastly different board and management.
