BHP Billiton capital investment boom will not be extended to its struggling aluminum and nickel operations in Western Australia, southern Africa and Latin America.
Mr Marius Kloppers CEO of BHP Billiton said that the focus for the 2 ailing divisions was to run them as 'lean and mean as possible'.
Mr Kloppers said that aluminum and nickel were businesses that 'are not going to see a lot of new investment. 'It's tough in the aluminum business. And nickel is a lot tougher. We've just got to make sure that we focus on those businesses, the existing assets and make them generate as much cash as we can.
But unlike the group's diamond business in Canada which is slated for possible sale early next year, BHP will not be abandoning aluminum and nickel. In aluminum particularly, there has been speculation that it too would go into a sale process.
Mr Kloppers said that was not the case with either metal. If you get an announcement that we are entering into the same process in aluminum or nickel as in diamonds. I will owe you a beer.
Mr Andrew Mackenzie group executive and CEO of the non ferrous division has had responsibility for aluminum and nickel within his portfolio moved across to that held by Mr Alberto Calderon group executive and chief commercial officer. Mr Calderon's title will change to chief executive aluminum, nickel and corporate development.
Mr Kloppers said that the change would allow Mr Mackenzie to concentrate on the three USD 10 billion plus growth projects in his portfolio Escondida copper in Chile, Olympic Dam copper and uranium in South Australia and the crop nutrient potash in Canada. 'We feel that moving them to Alberto will give Andrew the opportunity to focus on growth and Alberto to focus on the profitability of these two businesses.
Mr Kloppers said that both aluminum and nickel are facing price pressure, with prices now at levels at which respective global industries would struggle to break even. Neither business is overly important in the market's rating of BHP. That remains what BHP calls its tier 1 iron ore, coal, copper and oil and gas divisions. Along with the group's USD 20 billion creation of a shale gas business in the US with tier 1 potential and the business being established in potash, BHP is to spend more than USD 80 billion over 5 years expanding tier 1 operations.
Mr Kloppers also said that some of BHP's pessimism over the European debt crisis and its impact on commodity prices had lifted since its annual meeting three weeks ago. BHP's marketing division was reporting access to trade finance was a little better since the meeting.
His comment follows speculation in Europe that the ability of European banks to provide trade finance, in terms of meeting capital adequacy ratios, could be given special treatment in Europe's co-ordinated response to its debt woes.
Mr Kloppers said it was also encouraging that Chinese town and village steel enterprises an important bellwether had increased their operating rates in the last 10 days.
(Sourced from www.smh.com.au)
