BHP Billiton Plans to Sell 10 Assets After Debt Rises to Record; BHP has gone from holding $200 million in net cash at the end of 2010 to net debt of $30.4 billion at the end of 2012

BHP Billiton Plans to Sell 10 Assets After Debt Rises to Record

BHP Billiton Ltd. (BHP), the world’s largest mining company, is planning to sell about 10 of its assets amid a rise in debt levels after a two-year metals boom driven by Chinese demand stuttered.

The Gregory-Crinum coal mine in Australia’s Queensland state is among the assets being considered for sale, spokeswoman Eleanor Nichols said by phone today. The Australian newspaper first reported that Chief Financial Officer Graham Kerr told equity analysts last week the divestment program was focused on at least 10 BHP assets. The company owns mines, oil and gas wells, and processing plants.

Global mining companies are selling off businesses after slumping metal prices triggered more than $60 billion of writedowns to mineral resources. BHP’s debt has risen to a record $30.4 billion and Chief Executive Officer Marius Kloppers last month joined his counterparts at Rio Tinto Group and Anglo American Plc in stepping down from his role.

“Consistent with our commitment to simplify the portfolio, we continue to selectively pursue asset divestment opportunities, with a firm focus on value,” Nichols said in an e-mailed statement. “Any decision to divest an asset will be announced to the market.”

Copper unit head Andrew Mackenzie will take over from Kloppers in May. Kloppers gave up his fiscal 2012 bonus after booking a $2.84 billion charge last August to write down the value of shale gas assets in the U.S.

Net Debt

BHP has gone from holding $200 million in net cash at the end of 2010 to net debt of $30.4 billion on Dec. 30, according to data compiled by Bloomberg. Minerals demand growth will slow to 2 percent to 4 percent a year over the next five years, from 15 percent to 20 percent a year formerly, Kloppers said in an Australian Broadcasting Corp. interview last month.

BHP has already agreed to sell its 80 percent stake in Canada’s Ekati diamond mine to Harry Winston Diamond Corp. for about $500 million, and is raising $1.63 billion from selling its stakes in the Browse petroleum joint venture to Petrochina Co.

The price of iron ore, BHP’s most profitable business, averaged 27 percent lower during the six months to Dec. 31, data from The Steel Index shows. Iron ore may tumble to $110 a metric ton by the end of the year, as mines in China boost production, cutting import demand in the world’s largest buyer, Westpac Banking Corp. said last month.

To contact the reporter on this story: David Fickling in Sydney at dfickling@bloomberg.net

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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