FTSE 100 Component
|Industry||Metals and Mining|
Broken Hill Proprietary Company Limited (BHP) 1885;|
Billiton plc 1860;
Merger of BHP & Billiton 2001 (creation of a DLC)
(BHP Billiton Group & BHP Billiton Limited)
London, United Kingdom
(BHP Billiton plc)
Ken MacKenzie (Chairman)|
Andrew Mackenzie (CEO)
|Products||Iron ore, coal, petroleum, copper, natural gas, nickel & uranium|
|Revenue||US$38.285 billion (2017)|
|US$11.753 billion (2017)|
|US$6.222 billion (2017)|
Number of employees
BHP, formerly known as BHP Billiton, is the trading entity of BHP Billiton Limited and BHP Billiton plc, an Anglo-Australian multinational mining, metals and petroleum dual-listed public company headquartered in Melbourne, Victoria, Australia.
Founded in 1885 in the isolated mining town of Broken Hill; in 2017, BHP ranked as the world's largest mining company, based on market capitalization, and as Melbourne's third-largest company by revenue, which "almost tripled between 2004 and 2012."
BHP Billiton was formed in 2001 through the merger of the Australian Broken Hill Proprietary Company Limited (BHP) and the Anglo–Dutch Billiton plc, forming a dual-listed company. The Australia-registered Limited has a primary listing on the Australian Securities Exchange and is one of the largest companies in Australia by market capitalization. The English-registered plc arm has a primary listing on the London Stock Exchange and is a constituent of the FTSE 100 Index.
In 2017, some Billiton assets were severed and rebranded as South32, while a scaled-down BHP Billiton became BHP.
Two months later, the fledgling mining company acquired mineral rights to the tin-rich Billiton (Belitung) and Bangka Islands in the Netherlands Indies archipelago off the eastern coast of Sumatra.
Billiton's initial ventures included tin and lead smelting in the Netherlands, followed in the 1940s by bauxite mining in Indonesia and Suriname. In 1970, Shell acquired Billiton, accelerating growth and exploration. The tin and lead smelter in Arnhem, the Netherlands, was shut down in the 1990s. Billiton opened a tin smelting and refining plant in Phuket, Thailand, named Thaisarco (for Thailand Smelting And Refining Company, Limited), which still exists today.
In 1994, South Africa's Gencor Ltd. acquired the mining division of Billiton excluding the downstream metal division. Billiton was divested from Gencor in 1997, amalgamating with Gold Fields in 1998.
In August 2016, the company recorded its worst annual loss in history, $6.4 billion.
Towards the end of 2016 BHP indicated it would expand its petroleum business and make new investments in the sector.
The Broken Hill Proprietary Company Limited (BHP) also known by the nickname "the Big Australian", was incorporated in 1885, operating the silver and lead mine at Broken Hill in western New South Wales, Australia. The Broken Hill group floated on 10 August 1885. The first consignment of Broken Hill ore (48 tons, 5 cwt, 3grs) was smelted at the Intercolonial Smelting and Refining Company's works at Spotswood, Melbourne.
The resulting 35,605 ounces of silver raised a lot of interest when exhibited at the City of Melbourne Bank in Collins St. Some sceptics asserted the promoters were merely using silver from somewhere else, to ramp up the shares...Another shareholder, the dominating W.R. Wilson had had to lend [William Jamieson, General Manager] a new suit so he could take the first prospectus, printed at Silverton near Broken Hill on 20 June 1885, to Adelaide to start the float process.
The geographic Broken Hill, for which the town was named, was discovered and named by Captain Charles Sturt, stirring great interest among prospectors. Nothing of note was discovered until November 5, 1883, when Charles Rasp, boundary rider for the surrounding Mount Gipps Station, pegged out a 40-acre claim with contractors David James and James Poole.
Together with a half-dozen backers, including station manager George McCulloch, (a young cousin of Victorian Premier Sir James McCulloch), Rasp formed the Broken Hill Company staking out the entire Hill. As costs mounted during the ensuing months of fruitless search, three of the original seven (now remembered as the Syndicate of Seven) sold their shares, so that, on eve of the Company's great success, there were nine shareholders, including Rasp, McCulloch, Philip Charly (aka Charley), David James, James Poole (five of the original syndicate of seven, which had previously included George Urquhart and G.A.M. Lind), Bowes Kelly, W. R. Wilson, and William Jamieson (who'd bought shares from several of the founders).
Highly encouraged by the Minister for Public Works, Arthur Hill Griffith, in 1915, the company ventured into steel manufacturing, with its operations based primarily in Newcastle, New South Wales. The decision to move from mining ore at Broken Hill to open a steelworks at Newcastle was due to the technical limitations in recovering value from mining the lower-lying sulphide ores. The discovery of Iron Knob and Iron Monarch near the western shore of the Spencer Gulf in South Australia combined with the development by the BHP metallurgist A. D. Carmichael of a technique for separating zinc sulphides from the accompanying earth and rock led BHP to implement the startlingly simple and cheap process for liberating vast amounts of valuable metals out of sulphide ores, including huge heaps of tailings and slimes up to 40 ft (12 m) high. In 1942, the Imperial Japanese Navy targeted the BHP steelworks during the largely unsuccessful Shelling of Newcastle. Newcastle operations were closed in 1999, and a 70-ton commemorative sculpture, The Muster Point, was installed on Industrial Drive, in the suburb of Mayfield, New South Wales. The long products side of the steel business was spun off to form OneSteel in 2000.
BHP began to diversify offshore into a variety of projects. These included the Ok Tedi copper mine in Papua New Guinea, where the company was successfully sued by the indigenous inhabitants because of the environmental degradation caused by mining operations. BHP had better success with the giant Escondida copper mine in Chile, of which it owns 57.5%, and at the EKATI Diamond Mine in northern Canada, which, in 2013, it divested to Dominion Diamond Corporation (a subsidiary of The Washington Companies as of July 2017).
In March 2005, BHP Billiton announced a US$7.3 billion agreed bid for WMC Resources, owners of the Olympic Dam copper, gold and uranium mine in South Australia, nickel operations in Western Australia and Queensland, and a Queensland fertiliser plant. The takeover achieved 90 per cent acceptance on 17 June 2005, and 100 per cent ownership was announced on 2 August 2005, achieved through compulsory acquisition of the remaining 10 per cent of the shares.
On 8 November 2007, BHP Billiton announced it was seeking to purchase rival mining group Rio Tinto Group in an all-share deal. The initial offer of 3.4 shares of BHP Billiton stock for each share of Rio Tinto was rejected by the board of Rio Tinto for "significantly undervaluing" the company. It was unknown at the time whether BHP Billiton would attempt to purchase Rio Tinto through some form of hostile takeover. A formal hostile bid of 3.4 BHP Billiton shares for each Rio Tinto share was announced on 6 February 2008; The bid was withdrawn 25 November 2008 due to global recession.
As global nickel prices fell, on 25 November 2008, Billiton announced that it would drop its A$66 billion takeover of rival Rio Tinto Group, stating that the "risks to shareholder value" would "increase" to "an unacceptable level" due to the global financial crisis.
On 21 January 2009, BHP then announced that BHP Billiton Ravensthorpe Nickel Project in Western Australia would cease operations, ending shipments of ore from Ravensthorpe to the Yabulu nickel plant in Queensland Australia. Yabulu refinery was subsequently sold to Queensland billionaire Clive Palmer, becoming the Palmer Nickel and Cobalt Refinery. Pinto Valley mine in the United States was also closed. Mine closures and general scaling back during the global financial crisis accounted for 6,000 employee lay offs.
As the nickel market became saturated by both spiraling economics and cheaper extraction methods; on 9 December 2009, BHP Billiton sold its Ravensthorpe Nickel Mine, which had cost A$2.4 billion to build, to Vancouver-based First Quantum Minerals for US$340 million. First Quantum was one of three bidders for the mine, tendering the lowest offer. The Canadian company returned the mine to production in 2011. Ravensthorpe cost BHP US$3.6 billion in write-downs when it was shut in January 2009 after less than a year of production.
In January 2010, following the BHP Billiton purchase of Athabasca Potash for US$320m, The Economist reported that, by 2020, BHP Billiton could produce approximately 15 per cent of the world demand for potash.
In August 2010, BHP Billiton made a hostile takeover bid worth US$40 billion for the Potash Corporation of Saskatchewan. The bid came after BHP's first bid, made on 17 August, was rejected as being undervalued. This acquisition marked a major strategic move by BHP outside hard commodities and commenced the diversification of its business away from resources with high exposure to carbon price risk, like coal, petroleum and iron ore. The takeover bid was opposed by the Government of Saskatchewan under Premier Brad Wall. On 3 November, Canadian Industry Minister Tony Clement announced the preliminary rejection of the deal under the Investment Canada Act, giving BHP Billiton 30 days to refine their deal before a final decision was made; BHP withdrew its offer on 14 November 2010.
On 22 February 2011 BHP announced that it had paid $4.75 billion in cash to Chesapeake Energy for its Fayetteville shale assets, which include 487,000 acres (1,970 km2) of mineral rights leases and 420 miles (680 km) of pipeline located in north central Arkansas. The wells on the mineral leases are currently producing about 415 million cubic feet of natural gas per day. BHP plans to spend $800 million to $1 billion a year over 10 years to develop the field and triple production.
On 14 July 2011, BHP Billiton announced that it would acquire Petrohawk Energy of the United States for approximately $12.1 billion in cash, considerably expanding its shale natural gas resources in an offer of $US38.75 per share.
In August 2012, BHP Billiton announced that it was shelving its US$20 billion (£12 billion) Olympic Dam copper and uranium mine expansion project in South Australia, as a result of falling commodity prices and slowing global economic growth. The company simultaneously announced a freeze on approving any major new expansion projects.
Days after announcing the Olympic Dam pull-out, BHP announced that it was selling its Yeelirrie Uranium Project to Canadian Cameco for a fee of around $430 million. The sale was part of a broader move to step away from resource expansion in Australia.
On 19 August 2014, BHP Billiton announced it would create an independent global metals and mining company based on a selection of its aluminium, coal, manganese, nickel, and silver assets. The newly formed entity, named South32, was subsequently demerged with listings on the Australian Securities Exchange the JSE and the London Stock Exchange.
BHP Billiton agreed to pay a fine of $25 million to the United States Securities and Exchange Commission in 2015 in connection with violations of the Foreign Corrupt Practices Act related to its "hospitality program" at the 2008 Summer Olympics in Beijing. BHP Billiton invited 176 government and state-owned-enterprise officials to attend the Games on an all-expenses-paid package. While BHP Billiton claimed to have compliance processes in place to avoid conflicts of interest, the SEC found that BHP Billiton had invited officials from at least four countries where BHP Billiton had interests in influencing the officials' decisions (Congo, Guinea, Philippines and Burundi).
In February 2017, BHP Billiton announced a $2.2 billion investment in the new BP platform in the Gulf of Mexico. During the same year, as part of their plan to increase productivity at the Escondida mine in Chile, which is the world's biggest copper mine, BHP Billiton attempted to get workers to accept a 4-year pay freeze, a 66% reduction in the end-of-conflict bonus offering, and increased shift flexibility. This resulted in a major workers' strike and forced the company to declare force majeure on two shipments, which drove copper prices up by 4%.
In April 2017 activist hedge fund manager Elliott Advisors proposed a plan for BHP to spin off its American petroleum assets and significantly restructure the business, including the scrapping of its dual Sydney-London listing, suggesting shares be offered only in the United Kingdom, while leaving its headquarters and tax residences in Australia where shares would trade as depository instruments. At the time of the correspondence Elliott held about 4.1 per cent of the issued shares in London-listed BHP Billiton plc, worth $3.81 billion. Australia's government warned it would block moves to shift BHP's stock listing from Australia to the United Kingdom. Australian Treasurer Scott Morrison said the move would be contrary to the country's national interest and would breach government orders mandating a listing on the Australian Securities Exchange. BHP dismissed the plan saying the costs and risks of Elliott's proposal outweighed any potential benefits.
In May 2017, with much of the former Billiton assets having been disposed of, BHP Billiton began to rebrand itself as BHP, at first in Australia and then globally. It replaced the slogan "The Big Australian" with "Think Big", with an advertising campaign rolling out in mid May 2017. Work on the change began in 2015 according to BHP's chief external affairs officer.
The Australian BHP Billiton Limited and the British BHP Billiton plc are separately listed with separate shareholder bodies, while conducting business as one operation with identical boards of directors and a single management structure. The global headquarters of the BHP Billiton Group & BHP Billiton Limited (Australia) are located in Melbourne, Australia. BHP Billiton plc is located in London, England. BHP Billiton also has offices in India, China, Japan, Singapore and Australia.
The company's shares trade on the following exchanges:
In 1998, BHP hired American Paul Anderson to restructure the company. Anderson successfully completed the four-year project with a merger between BHP and London-based Billiton. In 2003, Brian Gilbertson of Billiton was appointed CEO, but resigned after just six months, citing irreconcilable differences with the boards.
Upon Gilbertson's departure, Charles "Chip" Goodyear, an Anderson protégé, was appointed the new CEO, increasing sales by 47 per cent and profits by 78 per cent during his tenure. Goodyear retired on 30 September 2007, with BHP stock valued at over $80 per share. Marius Kloppers was Goodyear's successor. Following Kloppers' tenure, Andrew Mackenzie, Chief Executive of Non-Ferrous, assumed the role of CEO in 2013. In response to investor demands and a diminishing mining boom, BHP Billiton announced in mid-April 2013 that Mackenzie's remuneration package would be 25 per cent less than that of Kloppers—Barry Fitzgerald. Writing for The Australian, the company stated that the decision represented the introduction of a "new era of austerity."
BHP operates a wide variety of mining, processing and oil and gas production operations in over 25 countries.
The company has five primary operational units:
The company's mines are as follows:
BHP Billiton is listed as one of the 90 fossil fuel extraction and marketing companies responsible for two-thirds of global greenhouse gas emissions since the beginning of the industrial age. Its cumulative emissions as of 2010 have been estimated at 7,606 MtCO2e, representing 0.52% of global industrial emissions between 1751 and 2010, ranking it the 19th-largest corporate polluter. According to BHP Billiton management 10% of these emissions are from direct operations, while 90% come from products sold by the company. BHP Billiton has been voluntarily reporting its direct GHG emissions since 1996. In 2013 it was criticised for lobbying against carbon pricing in Australia.
BHP Billiton voluntarily donates one per cent of pre-tax profits, calculated on the average of the previous three years’ pre-tax profit, to community programs. BHP Billiton is a founding partner and co-funder with the Australian government of Bush Blitz, operated by Australian Biological Resources Study with Earthwatch Australia.
Inclement weather caused a BHP Billiton helicopter to crash in Angola on 16 November 2007, killing the helicopter's five passengers. The dead were: BHP Billiton Angola Chief Operating Officer David Hopgood, Australian; Angola Technical Services Operations Manager Kevin Ayre, British; Wild Dog Helicopters pilot Kottie Breedt, South African; Guy Sommerfield of MMC, British; and Louwrens Prinsloo of Prinsloo Drilling, Namibian. The helicopter crashed approximately 80 kilometres (50 mi) from Alto Cuilo exploration facility in north eastern Angola. BHP Billiton responded by suspending operations in the country.
On 5 November 2015 a dam holding back waste water from an iron ore mine in Mariana, south-eastern Brazil, owned by BHP Billiton and Vale collapsed, devastating a nearby town with mudslides, killing at least 17 people, injuring more than 50 and causing enormous ecological damage, and threatening life along the river Rio Doce and the Atlantic sea near the mouth of the Rio Doce. The accident was the biggest environmental disaster in Brazil's history.
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