BHP Billiton & Rio Tinto Update

Submitted by Craig Strzelecki on 4 April, 2007 - 18:01

BHP Billiton & Rio Tinto Update from market analyst Citigroup Investment Research: After two weeks visiting mines in South America the key takeaways were:
1) BHP's operations are running well and the expansion projects are on-track;
2) Water availability and power costs in Chile are going to be an issue for new mines/expansions; and
3) CVRD is tackling the iron ore freight differential and appears to have significant organic growth potential.
Copper Growth — At Escondida (BHP 57.5%, RIO 30%) there is upside from:
1) Copper recoveries from the Sulphide Leach project that is currently ramping-up well; and
2) Exploration upside offsetting grade decline beyond 2011. Spence is commissioning ahead of our expectations and regional exploration could also offset expected grade decline beyond 2015.

New mines in Chile are going to face the double hurdle of escalating power costs from limited gas availability and more challenging access to ground water making new mines/expansions dependent on expensive desalination. CVRD is tackling the widening Chinese iron ore freight differential through assessing long-term contracts and fit for purpose vessels to lock in a cost of US$10-11/t, currently US$45/t. CVRD is currently the second largest diversified miner, but could challenge for the No.1 spot through leveraging a strong reserve base and organic growth options in iron ore and nickel, combined with aims to be a major coal producer and further diversify both commodity and country exposure..

BHP Billiton Limited is listed on the Australian Stock Exchange (ASX) under stock code BHP. You can view their investor website here. BHP was listed on the ASX on 13 August, 1885. Charles "Chip" Goodyear is the CEO of BHP Billiton and Don Argus the Chairman. BHP Billiton was created through the Dual Listed Companies (DLC) merger of BHP Limited (now BHP Billiton Limited) and Billiton Plc (now BHP Billiton Plc), which was concluded on 29 June 2001. BHP Billiton Limited and BHP Billiton Plc continue to exist as separate companies, but operate on a combined basis as BHP Billiton. The headquarters of BHP Billiton Limited, and the global headquarters of the combined BHP Billiton Group, are located in Melbourne, Australia. BHP Billiton Plc is located in London, United Kingdom. The company is principally involved in minerals exploration, production and processing (particularly coal, iron ore, copper and manganese ore) and hydrocarbon exploration, production and refining. Rio Tinto Limited is listed on the Australian Stock Exchange (ASX) under stock code RIO. You can view their investor website here. The company was listed on the ASX on 1 January, 1970. Leigh Clifford is the CEO and Paul Skinner is the Chairman for this mining resources company. Rio Tinto is a leading international mining group, combining Rio Tinto plc, a London listed public company headquartered in the UK, and Rio Tinto Limited, which is listed on the Australian Stock Exchange, with executive offices in Melbourne. The two companies are joined in a "dual listed companies" (DLC) structure as a single economic entity, called the Rio Tinto Group. The Group finds, mines and processes the earth's mineral resources - metals and minerals essential for making thousands of everyday products that meet society's needs and contribute to improved living standards. Find out the meaning of the recommendations in this primer. Browse for other stockbroker recommendations. You can use Instalment Warrants to trade BHP & RIO. Check your charts and good luck with your share trading!

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