BHP Billiton Preview, Expanding Iron Ore Mine Supply Start

In a US version of its annual report released yesterday, the chairman, Don Argus, expressed disappointment in BHP’s recent share price performance.

BHP shares peaked at a record $49.55 in mid-May but have since fallen 27 per cent, although closing 35c higher at $36.40 yesterday amid a volatile market.

BHP BILLITON has painted a bullish view of the long-term demand for commodities but has warned that expanding iron ore supply is beginning to catch up with demand.

“The 2008 financial year has seen higher average prices for most of our commodities than in the prior year,” the report said. “Demand for raw materials in the emerging market economies has remained strong.”

But it warned increased iron ore supply from itself, Rio Tinto, Brazil’s Vale, Fortescue Metals and Indian suppliers meant the gap between supply and demand was starting to close.

Nevertheless, BHP lowered the cut-off grades on its iron ore reserves. A spokeswoman, Samantha Evans, said the grade sold would not change despite the lower average grade of its reserves: “Our blending strategy enables us to better utilise the resource by including lower-grade material in the same product. It’s as a result of some proprietary mine-planning software.”

Changes in commodity prices over the year meant BHP was able to add to its manganese reserves, but it was forced to slash the expected life of its Mt Keith mine in Western Australia by three years after some of the deeper reserves were rendered uneconomic by the lower nickel price.

BHP’s chief executive, Marius Kloppers, said the $US15.4 billion ($19.6 billion) record annual profit was “outstanding” in the context of a challenging supply environment which included unexpected disruptions, rising costs and a weaker US dollar.

But he added BHP’s safety performance was not acceptable, citing the deaths of 11 workers last year and four since the start of this financial year.

“[This year] we are making even greater efforts to improve our safety performance,” he said.

The report revealed his remuneration had risen to $US6.87 million last year, up from $US4 million the previous year. He was elevated to the top job in October.

The former chief executive, Chip Goodyear, who left the company in January, received $US6.15 million last year, down from $US7.8 million the previous year.

Mr Argus’s remuneration rose to $US920,000 last year, up from $US818,000, maintaining his position as one of Australia’s highest-paid chairmen.





China Energy and Metal Producer CITIC Announce Net Profit Jump, Increase Oil Production And High Metal Prices


The company said in a statement filed with the Hong Kong Stock Exchange that revenue in the Jan.-Jun period climbed 83% to hit HK$9.49 billion, compared with HK$5.18 billion. Earnings per share increased to HK$0.984 from HK$0.283.

China’s energy and base metals producer CITIC Resources Holdings Ltd<1205> announced on Monday its net profit jumped almost fourfold in the first half-year ended on June 30 to HK$520.1 million from HK$138.3 million a year earlier, fueled by increased oil output and record high of metal prices.