BHP Billiton Limited’s
(ASX:BHP) recently appointed chief executive, Andrew Mackenzie, this week overhauled the global miner’s management team, directing focus toward driving low-cost -production as opposed to expansion in preparation for sector challenges ahead.
Among the changes; petroleum head Mike Yeager, ferrous and coal chief executive Marcus Randolph and corporate development head Alberto Calderon, will depart BHP or accept advisory roles. Mr Mackenzie also elevated five operational heads to the management committee, affording himself what he described as “better visibility” over operations in a memo to staff.
According to Mr Mackenzie, the changes are“...necessary to drive our agenda of operational excellence and improved productivity in a world that is unlikely to enjoy the pricing environment we have seen in recent years.”
Economic news
The Westpac-Melbourne Institute Leading Index rose to 4.2 per cent in February, well above its long-term trend of 2.8 per cent. According to the index economic growth is on the rebound, owing in part to a recovery in commodity prices.
Commentary
University of Melbourne economist Ross Garnaut this week spoke at an Australian National University seminar, warning that the Australian economy is likely to slide alongside a decline in the mining boom.
Mr Garnaut believes the Australian government should insulate the economy against the inevitable end of the mining investment phase by enacting significant cuts on interest rates, noting that Australia has held up its exchange rate as commodity prices have fallen.
According to Mr Garnaut, ‘We need to take interest rates down closer to the rest of the developed world. "....The difference between Australia and the rest of the world is very big.” A reduction in interest rates would lower the dollar and relieve pressure on companies trying to compete globally, enabling them to maintain their footing in the face of a decline in mining investment.
Musings from the top tier
Rio Tinto Limited
(ASX:RIO) has lodged an appeal with the Supreme Court against a decision blocking it from expanding the Mt Thorley Warkworth coal mine. The mining giant’s subsidiary Coal & Allied is challenging last week's NSW Land and Environment Court decision.
Fortescue Metals Group Limited
(ASX:FMG) chief executive Nev Power believes iron ore prices will hover between $139 and $140 in the near term due to depleted stockpiles, before settling between $120 and $130 and avoiding a repeat of last year’s price tumbles.
Woodside Petroleum Limited
(ASX:WPL) announced a special dividend of $US0.63 per share, payable to shareholders on May 29 as the oil and gas giant enjoys a boom period of promising growth prospects and strong cash flows. Also this week, Woodside shelved another significant growth option, ending talks with other gas-field owners to expand its Pluto LNG venture.
Production and guidance by the quarter
Iluka Resources Limited
(ASX:ILU) cut production by nearly half in the March quarter, and will reduce it even more as prices fall and demand softens.
Newcrest Mining Limited
(ASX:NCM) has maintained its gold and copper production guidance after producing 514,421 ounces of gold and 19,023 tonnes of copper in the March quarter, however says all of its business activities remain under review.
Lynas Corporation Limited
(ASX:LYC) achieved first production of rare earths materials at its Malaysian Advanced Materials Plant in the first quarter and is ramping up to achieve nominal capacity of 11 thousand tonnes annually by the end of June. The controversial plant has one legal challenge against it remaining to be heard by the Kuantan high court in Malaysia.
Arafura Resources Limited
(ASX:ARU) says it hopes to cut capital expenditure by as much as $1 billion at its Nolans project in the Northern Territory, amid lower rare earths prices, increasing business costs and depressed capital markets.
