Recently, the global iron ore market is changing can not be ignored. First of all, this week in iron ore prices fall non-stop and fell below 90 U. S. dollars / ton, close to the 2012 September lows; secondly, after prices fell, led to the analysis of the mechanism of concerns about the operation situation of small and medium-sized miners; finally, after the mining giant BHP Billiton announced in last fiscal year earnings reported profit growth split, announced a $about 10000000000 business.
Iron ore prices are in decline by foreign media that is one of the important "push BHPs stripping operations". As a giant in the mining industry, the management of BHP Billiton, steering, are considered in the commodity boom receded, a trend of mine enterprise.
Part of the mining enterprise balance of payments difficulties
"The West Australian newspaper" reported that, this Tuesday China Tianjin Port imported iron ore benchmark prices have dropped to 88.9 U. S. dollars / ton. The media said, so far, the price of iron ore from the beginning of this year has fallen by nearly 35%, and is close to the 2012 low prices in September 86.7 U. S. dollars / ton. "Financial Times" say, this week the price of iron ore has fallen in the past two years low. Platts metals deputy editor Anna Lisa said: "the price of iron ore was mainly caused by the excess supply in the market, especially the Australian new iron ore; at present, in the steel prices fall, steel mills compared to hesitate to buy iron ore."
With the gradual decline in iron ore prices, some medium-sized Australian miners have difficulties in operating balance. According to UBS recently released report, currently has 3 miners face such difficulties. For example, Clifs Natural Resources Corp (Cliffs), the Australian mining assets in listed and USA. In addition, Grange Resources Inc (Grange Resources) and Australia Gindalbie (Gindalbie) mineral company also because iron ore prices and production situation of poor business, the two companies operating balance iron ore price respectively is 87 dollars / ton and $98 / ton. UBS also said, after this will be Atlas Iron Ore Co and Arrium group, the two enterprises ore iron ore cash cost of US $80 / ton.
BHP Billiton split business focus on "four pillars"
Announced last year the distributable profits grew 23% to $13800000000, Australian miners BHP said, will cut the business scale, peeling, manganese, nickel, aluminum silver assets, and the business set up a company called NewCo new metal mineral company, Australian investor and hold the British listing Corporation shares through the form to obtain the new company stock rights. The new company will by current chief financial officer Kerr leadership. BHP said, is expected to be completed during the first half of the assets in 2015.
It is reported, the new company will be listed on the stock exchange of Australia and South africa. Analysis of this industry is, BHP wants to peel these until recently still drag on the performance of assets, enable it to focus on the core of iron ore, copper, coal, petroleum, fertilizer business, in order to elevate these large business productivity. Some Australian media that, new project BHP stripping out at $15000000000 US $~170. The British "Financial Times" on these assets are valued less, $13000000000.
"Financial Times" said, the stripping, BHPs four major business is iron ore, petroleum, copper and coal, this will be the companys future business "four pillars", K will be as fifth potential business. This several big business profits are far better than the other the divested business, the potential annual earnings in most of the companies are from this.
British "Daily Mail" say, BHP Billiton this stripping mining had "expansion symbol ambition era" end, because the expansion of the company had a total of nearly $100000000000 bid failed transaction. BHP Billiton to personally decomposition by the hand and expansion of mining "empire". Separation of business logic is very simple -- BHP Billiton will focus its most profitable business. "Financial Times" said that, from the latest annual can be seen, the company half of the income still comes from the Australian iron ore operations.
BHP chief executive Andrew think, the new company formed the stripping assets will "in the specialized, separate companies has more value". However, this business split Jeffrey group analyst Christophe is not optimistic about the bhp. He said, spin off non core, low quality assets can not create value, "a company into two, may produce synergistic benefits negative, but we also dont believe that the value of these non core assets in BHP Billiton internal business is undervalued".
Business strategy of mining enterprises facing the turning point
In iron ore prices fell in the background, the large miners also made major adjustments to the business side of the. "Financial Times" reported on August 19th, BHPs divestment is a turning point in the global mining industry -- one of the industrys most valuable enterprise will be determined from the "more is better" expansion mode of operation. This also means that in the commodities boom, mining enterprises to carry out large-scale acquisitions and expansion to the end of time.