HomeBase MetalsBHP Billiton seeks cheap takeovers

BHP Billiton seeks cheap takeovers

The copper cathodes
plant at the La
Escondida copper mine
Melbourne, Australia — MININGREVIEW.COM — 05 February 2009 – The world’s biggest miner – BHP Billiton – is still hunting for cheap takeovers and finds some of rival Rio Tinto’s assets attractive, but because of the subdued market outlook, it is in no hurry to act.

Chief executive Marius Kloppers says the company is seeking to take advantage of its position of having the strongest balance sheet among major miners, while some rivals are weighed down by debt burdens.

Rio Tinto is scrambling to sell assets to help whittle down its debt load of nearly US$39 billion (close to R400 million).

Reuters quotes some analysts as saying Rio might be interested in selling its stake in Chile’s Escondida – the world’s biggest copper mine – but Kloppers declined to give details of which Rio assets he might be keen on buying. “Certainly there are certain Rio assets that would be attractive, but I can’t take that comment any further,” he told a conference call here following first-half results.

The agency says Rio might be able to get US$6 billion (R60 billion) for its 30% stake in Escondida, which BHP operates, Credit Suisse has said. BHP, which dropped a US$66 billion (R660 billion) hostile bid for Rio in November, has pre-emptive rights to buy the remaining stake.

BHP posted a 2.2% rise in first half profits before exceptional items this week. Cash flow jumped 74% and it was able to cut its already low debt.

This strong stance would help the group as it looked at possible takeovers amid a sharp fall in metals and share prices, but it would only buy top-quality assets, Kloppers emphasised.“The fact that we haven’t executed anything means that we probably haven’t identified opportunities which fit properly,” he said. “But if and when these opportunities arise, we have the capacity to act.”

Kloppers said he was not worried that no deals had been sealed yet, since the firm expected the market to stay weak in the medium term. “We always have something that we’re looking at, but I think that our window of opportunities would extend a little bit further, given the weakness that we’re seeing in markets.”