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Chillin' out till it needs to be funded

BHP Billiton chooses Deutsche Bank team as advisor | Deal Insight

Reut.rsA lot of assets in Indonesia, Australia and South Africa come for negotiation of owner’s interest i.e. sales to new owners of part or controlling or full interest with or without exploration and marketing exclusivity, including resources such as natural Gas , still ruling at all time highs ( despite 98 TCF being withdrawn from the EIA reserve for the second time in two months)  Indonesia showing strong growth from new Power and Energy resources as well as traditional mining ( one supposes) and  Aussie bid for FDI among other factors.

Indian houses as well as Chinese state vehicles are also interested in the race for resources, as 2012 begins and Brazil and Russia emegre strong after a dull resource glut driven 2011.

In Richard Bay minerals in So Africa, BHP Billiton owns a 37% share it is selling the company operates Sands mining which is not core to BHP Billiton identified operations.

The other one is a Diamond mine in Canada’s North West Territories, near the Arctic Circle where BHP Billiton owns 80% with the indvidual finders of the mine location.

BHP Billiton expects to get more than $10 bln from the asset sales this year that may help it mount a Capex led recovery or just help it rationalise the portfolio of oddities the giant merger has brought to it., with sales taking a dip this year.

Glenxstrata on the other hand with just $90 bln in sales turnover, already has a management team in control which had defined expansion plans baced by $20 bln in Capex on the drawing board in September 2011.

Also, BHP was apparently late in entering Shale and one does not know whether its plans to improve the yield in the Shale Fields it bought off Petrohawk and Chesapeake have fructified after the $20 bln it spend on getting the resource at the peak of demand in Natural Gas which still continues.

The sector may not be very forgiving for large scale cash expenditure by Companies that can then not leave mid way or at least the history of profitable operations by established 100 year old companies makes one think that is the strategic key esp as the later productions is based on your face down Capital expenditure more than any maintenance and improvement expenditure.

The company has also been unlucky in having tlost the bids for Potash Corp and even Rio Tinto


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One comment on “BHP Billiton chooses Deutsche Bank team as advisor | Deal Insight

  1. Pingback: US Economy (EoD review) : BHP speak still scares CAT, 5 yr Auction, SCOTUS and unburnt crude | The Banking and Strategy Initiative

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