BHP Billiton Rethinks Expansion Plans
As the health of the global economy, in lightning speed, turns from nasty to gloomier, even big spenders stop and pause to think if it ought to continue and pursue valiantly plans of improvement and expansion.
Such was the case for BHP Billiton Ltd., as its very own chairman, Jacques Nasser, has already suggested the $80 billion it planned to invest on new mining projects by 2015 would rather be kept inside the safe momentarily.
Although discussion for expansions plans continue to be pinned on the drawing board, BHP needs to be prudent about capital allocation as the world is now "in a very serious situation," the Wall Street Journal quoted Mr Nasser as saying during a business lunch in Sydney on Wednesday.
Analysts and experts have more or less seen the pronouncement coming.
"Their view is that commodity prices are not going up from here, and in that scenario, you can't be spending $24 billion to $25 billion a year," analyst Hayden Bairstow said in Reuters News.
Early in 2011, Marius Kloppers, chief executive officer of BHP Billiton Ltd., said the company will dedicate $80 billion on new projects that include iron-ore production in Australia's Pilbara region, the Escondida copper mine in Chile, and potash mining in Canada, among others.
BHP Billiton Ltd. is the world's biggest coking-coal miner by volume and a top producer of copper, iron ore, nickel and silver.
"When (Marius Kloppers) talked about that $80 billion... the environment was different, that's the first thing," Mr Nasser said. "The second thing is investors were saying: 'Well, where is the growth [opportunity]?' It was, I think, a valiant attempt to say we have a multitude of choices."
"It is all about appropriate allocation of capital... We should pause, take a deep breath and wait and see where the pieces fall around the world," he added.
"Besides, he (Marius Kloppers) never said we are going to do them all at the same time."
"Constraining capital is not a bad idea in this environment," John Robinson, chairman of Global Mining Investments, told Reuters News.