Must-know: An investor’s guide to BHP (Part 3 of 10)
BHP’s major assets
It’s important to understand where BHP Billiton’s (BHP) major assets are located. The asset locations are explained below.
Petroleum and potash assets
- Onshore U.S. – It includes four shale fields operated onshore in the U . S .— Eagle Ford, Permian, Haynesville, and Fayetteville
- Gulf of Mexico – Two operated fields and three non-operated fields
- Bass Strait – It includes interests in offshore projects and processing in the Bass Strait, off the south-eastern coast of Australia
- North West Shelf – Interest in an offshore project and processing in western Australia
- Escondida – It’s the world’s largest producer of copper, located in Chile
- Cannington – It’s one of the world’s largest producers of silver, located in Queensland, Australia
- Olympic Dam – It’s a major producer of copper and uranium, located in south Australia
- Pampa Norte – It includes two copper mines, located in Chile
- Antamina – BHP has a joint venture interest in a copper and a zinc mine, located in Peru
Iron ore assets
- Western Australia iron ore (or WAIO) consists of an integrated system of mines and ~1,000 kilometers of rail infrastructure and port facilities in the Pilbara region of western Australia. Its WAIO operations consist of four major joint ventures—Mt. Newman, Yandi, Mt. Goldsworthy, and Jimblebar. Currently, BHP’s interest in each of these is 85%. The reserve life of WAIO mines is 17 years.
- Samarco – It’s a 50:50 joint venture with VALE at the Samarco operation in Brazil. It has a mine and two concentrators, located in Minas Gerais. It also has three pellet plants and a port. In fiscal year 2013 (or FY13), BHP’s share of production was 11 Mt of pellets. The reserve life of Samarco is 40 years.
- BHP Billiton Mitsubishi Alliance (or BMA) – contains two joint ventures, where it has 50:50 partnership with the Mitsubishi Development
- BHP Billiton Mitsui Coal (or BMC) – is a subsidiary company owned by BHP and Mitsui & Co. BHP owns 80% and Mitsui & Co. owns 20%. It operates the South Walker Creek and the Poitrel mines. The mines have a mine life of 21 years and 13 years, respectively.
- Illawarra Coal – it owns and operates three underground coal mines in the Illawarra region of New South Wales, Australia
Aluminium, manganese, and nickel assets
- BHP’s portfolio includes aluminium operations in southern Africa— Hillside, Bayside, and Mozal smelters. It also has operations in Australia—Boddington/Worseley—and South America—Alumar. Manganese assets are located in Australia—GEMCO and TEMCO—and South Africa—HMM and Metalloys. Nickel assets include nickel west in Australia and Cerro Matoso in Colombia.
Geographical diversification helps companies like BHP Billiton (BHP), Rio Tinto (RIO), and Anglo America (or AAUKY)—over less diversified companies like Fortescue Metals Group (FMG) and Cliffs Natural Resources (CLF)—to spread the overall exploration risk. The SPDR S&P Metals & Mining ETF (XME) is also a good way to gain exposure to the metals and mining sector.
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