Tuesday, February 23, 2016

For BHP Billiton, a (small) light at the end of the mine – The World

Le Monde | • Updated | By

An iron mine of BHP Billiton in Port  Hedland (Australia).

There was a time when iron was worth eight times more expensive than gold. It was there forty five centuries toward Mesopotamia. Because almost all of the iron used at the time came from meteorites, a precious and rare commodity, says Alessandro Giraudo in his book When iron was more expensive than gold , Fayard, 2015) .

Today, gold is worth a million times more expensive than iron. Technology and abundant supply have changed that. So much so that, periodically, overcapacity send the price of the steel base ingredient to the mat. End of 2015, helping Chinese crisis, prices were at their lowest in six years. But great news, the trend reversed. On this early year 2016, the price per ton of ore rose 18%, exceeding the symbolic 50 dollars per tonne

Read also:. The descent hell iron

would the recovery area of ​​the mine? Not really, if we judge by the statements of the first world player of raw materials, the Anglo-Australian BHP Billiton. The group, which has announced its fiscal first half net loss of $ 5.7 billion (5.16 billion euros), warned that commodity prices would remain permanently depressed by overcapacity.

But a little light, still trembling, arose at the end of the tunnel: investors found appetite. The giant BHP itself announced a fourfold its dividend … under pressure from the markets! According to them, there is now great opportunities not to be missed for those who still have some cash on hand. So they push the Anglo-Australian from the acquisitions trail, thanks to some 10 billion it will save on dividends and cost reduction.

Read also: raw materials suffer from the slowdown in Asia

the old law of supply and demand

It will not be the only one this year. Recently, the Japanese group Sumitomo Metal Mining disbursed a billion to increase its stake in a copper deposit in Arizona. A price deemed reasonable. The rival BHP, Rio Tinto fellow, is also hunting party, including the copper side.

The same is being developed in the field of oil and gas. According to Bloomberg, great private funds like Carlyle or Blackstone raised the last two years nearly $ 20 billion to their market in this area. And France, the cautious fund Carmignac Gestion, who had deserted from the September 2015 equity markets, has decided to return to the oil companies, convinced that they had reached a low point.

The signal is still timid and certainly not indicating an economic recovery. Just recall the old law of supply and demand, and the presumption that distant day, oil and iron ore will be worth so rare that they can again be more expensive than gold.


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