The chief govt of BHP has signalled that the world’s greatest mining firm will resist the temptation to go on an acquisition spree regardless of a rising conflict chest.
Mike Henry advised the Monetary Occasions that “we need to be fairly disciplined” and that the corporate would look to exploration, natural development and better productiveness to lift its output.
BHP’s unsolicited A$8.4bn bid for OZ Minerals in August was swiftly rejected by shareholders, fuelling hypothesis it’d come again to the desk with a extra beneficiant supply.
Nevertheless, Henry mentioned BHP can be restrained about which M&A alternatives to pursue.
“OZ is a nice-to-have, it’s not vital for BHP,” he mentioned on the FT’s Mining Summit. “We now have these different levers of productiveness, natural development, exploration and early-stage entry that provides us the liberty to be fairly choiceful concerning the M&A alternatives we are going to pursue.”
BHP, which pulls most of its income from iron ore and coking coal, has been on the hunt for development with a give attention to potash, copper and the nickel utilized in electrical automobile batteries.
OZ accomplished a feasibility course of to kick-start the event of its distant A$1.7bn nickel and copper mine in Western Australia final month. The undertaking will open up a brand new frontier for Australian nickel manufacturing, and its viability may present extra consolation for bidders together with BHP in establishing OZ’s worth.
Bumper income final 12 months imply BHP has a sizeable conflict chest at its disposal, ought to it select to pursue acquisitions. Nevertheless, its shareholders additionally count on numerous that money to be given again to them. The corporate returned $16.5bn to traders throughout its previous fiscal 12 months.
The mining firm has additionally consolidated its Australian and British share construction — a transfer analysts say will make vital acquisitions simpler to finish — and has break up off its oil and fuel operations through a merger with Woodside that accomplished earlier this 12 months.
Henry mentioned he was cautiously optimistic on the outlook for China, the world’s largest client of commodities.
China delayed the discharge of its third-quarter financial knowledge this week, including to considerations a couple of slowdown that has been compounded by Covid lockdowns.
“Our view is that China continues to be going to supply a little bit of stability or underpinning to world financial development over the subsequent 12 months. We’re seeing some inexperienced shoots in China,” mentioned Henry, pointing to elevated property gross sales and completions.
Metal manufacturing in China was prone to be simply over 1bn tonnes this 12 months, he added, 1-2 per cent decrease than in 2021.
In an replace this week, BHP maintained its manufacturing and price steering for the 12 months as a robust efficiency in iron ore and nickel helped offset decrease volumes in copper and coal, which had been hit by moist climate in Australia and labour shortages.
Rival Rio Tinto, which additionally mines iron ore within the Pilbara area of Western Australia, warned this week that recessionary fears within the US and Europe and the struggling Chinese language housing market would damp demand for commodities.