[Bhpbilliton] BHP investigated for anti-graft violations

[Andy Whitmore]

Dear all,

Many of you will probably have seen the news already that BHP is being 
investigated under anti-graft laws - and also seen that the 
project/country has not been named. There is therefore some conjecture 
on this & a number of us have been approached by journalists. If anyone 
does have any information please do share with us all - or contact me & 
I can put us in touch with some of the interested journalists (although 
they are now moving on from the initial story...).

Best wishes.

Whit

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BHP investigated for anti-graft violations

The case, under investigations by the SEC comes as the group along with 
Rio Tinto seek regulatory approval for a $116bn Australian JV

James Regan (Reuters) - 
http://www.mineweb.com/mineweb/view/mineweb/en/page72068?oid=103023&sn=Detail&pid=92730

21 Apr 2010

SYDNEY - Global miner BHP Billiton has discovered potential violations 
of anti-graft laws relating to its exploration activities, in another 
blow to the mining industry's tarnished image.

The case, under investigation by the U.S. markets watchdog, follows the 
jailing in China last month of staff from rival Rio Tinto and comes as 
both mining giants seek regulatory approval for a $116 billion 
Australian joint venture.

"This is probably the last thing they need at this point in time," said 
Tim Schroeders, fund manager with Pengana Capital, referring to BHP's 
need to keep international regulators onside as it looks to combine its 
main iron ore operations in west Australia with those of Rio Tinto.

BHP Billiton said on Wednesday it had found the possible violations, 
relating to old exploration projects, and was now cooperating with the 
U.S. Securities and Exchange Commission (SEC) and carrying out its own 
internal probe.

By 0150 GMT, BHP shares were flat in a slightly firmer market , with 
analysts taking comfort in the fact the possible violations were 
unrelated to China or BHP's sales and marketing.

"The fact that the investigation applies to expired mineral exploration 
tenements is infinitely preferable to if it had applied to marketing or 
sales activities, which would have potentially far-wider-ranging 
implications," said Michael Bush, National Australia Bank's head of 
fixed income credit research.

He said it was unlikely to have any significant implications for BHP's 
credit ratings.

BHP said the exploration projects in question had been terminated before 
December 2008, were "relatively small" and were not related to any 
activities in China, but it declined to detail the possible violations. 
The SEC declined to comment.

"The company has disclosed to relevant authorities evidence that it has 
uncovered regarding possible violations of applicable anti-corruption 
laws involving interactions with government officials," it said in a few 
lines dropped into its quarterly production and exploration report.

"It is not possible at this time to predict the scope or duration of the 
investigation or its likely outcome," BHP said.

Mining analysts said regulators worldwide would be watching the case 
closely as they weigh up BHP's planned Australia iron ore joint venture 
with Rio Tinto.

Steelmakers in Asia and Europe are pressing regulators to block the 
venture, arguing it would give the pair undue influence on the price of 
iron ore, which has more than doubled on the spot market over the past 
12 months amid a commodities boom fuelled by Chinese demand.

BHP Billiton and Rio Tinto are the third- and second-largest producers 
of iron ore, respectively.

EXPLORATION PERMITS NOT IN U.S. - SOURCE

A source familiar with the matter said the projects in question were 
outside the United States, but would not say where they were located.

"This is obviously an event that BHP will wish had not occurred and my 
have implications for its ability particularly to undertake exploration 
activities in the relevant jurisdiction," NAB's Bush said in a note.

The U.S. Department of Justice declined to comment on whether it, too, 
was looking at the case.

"We can confirm that the SEC's requests for information primarily relate 
to certain terminated minerals exploration projects and not any activity 
in China, BHP Billiton's marketing activities or the sale of any of the 
company's products," BHP said in a separate, emailed statement on 
Wednesday. (Additional reporting by Karey Wutkowski in WASHINGTON and 
Cecile Lefort and Bruce Hextall in SYDNEY; Writing by Mark Bendeich; 
Editing by Anshuman Daga)

-------------------

Issues cast shadow over BHP’s record production

Tania Winter - http://www.miningnews.net/StoryView.asp?StoryID=1134786

21 April 2010

WHILE BHP Billiton set production records in its iron ore division on 
the back of ongoing expansions in the March quarter, safety issues, 
lower grades, industrial action and the ongoing impact of the shaft 
collapse at the Olympic Dam operation in South Australia, continue to 
hurt the miner.

The major is also cooperating with US authorities in an investigation 
into possible corruption involving government officials.

It stressed the investigation did not involve China, or its marketing or 
sales division, but related “primarily to certain terminated minerals 
exploration projects”. Information about the investigation was included 
in the company’s March quarter production, exploration and development 
report, released today. Notable impacts were felt in the base metal 
division, particularly copper which was down 13% for the year to date 
and 15% for the March quarter, compared to the previous three-month 
period to 784,100 tonnes and 229,000t respectively.

The major said this was mainly due to the Olympic Dam shaft incident, 
industrial action at its Spence mine, lower grades at its Cerro Colorado 
operation (0.72% copper compared to 0.77% in the December quarter), both 
in Chile, lower grades from Antamina in Peru (1.02% copper and 1.59% 
zinc compared to 1.15% copper and 2.04% zinc for the December quarter) 
and the cessation of sulfide mining at the Pinto Valley property in the US.

Olympic Dam produced 1900t of copper cathode (ER) and 300t of copper 
cathode (EW), 89t of uranium oxide concentrate, 1652oz of gold and 
13,000oz of silver for the quarter, bringing year-to-date figures to 
61,400t of copper cathode (ER), 4600t of copper cathode (EW), 1567t of 
uranium, 51,775oz of gold and 388,000oz of silver.

One bright note was the repair of the mighty Escondida mine in Chile, 
but this was short-lived with lower grades and safety interventions 
impacting operations in the March quarter.

Average grades were 1.29% copper for the quarter, compared to 1.38% in 
the December quarter and 1.40% in the September three-monthly period.

However, this was partially offset by stronger production at Spence as 
it returned to capacity during the latest three-month period following 
industrial disruptions in the December period.

Another revenue stream in the base metal business to take a hit was 
uranium, which was down 45% for the year to date and 74% for the March 
quarter versus the December period to 1567t of uranium oxide concentrate 
and 89t respectively, compared to 348t in the December quarter.

Lead and zinc, while up 8% and 28% respectively for the year to date to 
185,570t of lead and 152,857t of zinc, was down 3% and 22% for the March 
period compared to the December quarter to 61,127t of lead and 46,597t 
of zinc.

The Australian operation in this space, the world-class Cannington mine 
in Queensland, produced 9.6Moz of silver, 60,577t of lead and 15,257t of 
zinc for the March quarter, bringing the year-to-date numbers to 
27.95Moz of silver, 183,157t of lead and 48,771t of zinc.

Grades were up on all fronts with silver up to 494 grams per tonne 
compared to 405gpt in the December quarter, lead up to 10% from 8.5%, 
and zinc up to 3.5% from 3.4%.

Nickel was also down 12% for the quarter compared to the December period 
to 43,300t, but 30% higher for the year to date to 127,700t following 
the major furnace rebuild at Nickel West Kalgoorlie.

Production for the quarter, the miner said, was impacted by a 
restriction in hydrogen supply at Nickel West’s Kwinana refinery and by 
planned and unplanned downtime at Nickel West in Kalgoorlie and Cerro 
Matoso in Colombia.

As predicted, iron ore production was higher for the year to date and 
the March quarter due to the successful delivery of growth projects in 
the Pilbara and contributions from the Samarco operation in Brazil, 
although the latest three-monthly period was impacted by weather-related 
disruptions and project tie-in activities in Western Australia.

Production for the March quarter reached 31.16 million tonnes, bringing 
the year-to-date figure to 93.71Mt.

Of this, the Pilbara kicked in 33.4Mt of which BHP’s share was 28.39Mt, 
with total sales of 32.99Mt (28.04Mt BHP’s share), or just over 1 
billion tonnes for the year to date (85.43Mt BHP’s share) with 
year-to-date sales of 99.69Mt (84.74Mt BHP’s share).

While the Rapid Growth Project 4 is currently ramping up, the next stage 
and aptly named Rapid Growth Project 5, is set to increase capacity by a 
further 50Mtpa.

As for alumina, production was higher for the latest quarter and year to 
date by 9% to just over 1Mt and 2.8Mt respectively, with aluminium 
production only slightly up on the year to date and down 2% for the 
quarter compared to the December quarter to 932,000t and 306,000t 
respectively.

The higher result came about due to the continued ramp-up of the Alumar 
refinery expansion in Brazil and increased volumes from the Worsley 
refinery in WA.

The company said the Alumar refinery ramp-up period had also been 
extended to late this calendar year.

Diamond production was also lower in the March quarter due to lower 
average grades from the Ekati mine in Canada with 770,000 carats 
produced, bringing the year-to-date figure to 2.31 million carats.

Manganese production also continued to ramp up in the quarter, in line 
with improved demand, to 1.71Mt, bringing the year-to-date figure to 4.40Mt.

Manganese alloy output reached 171,000t for the quarter and 365,000t for 
the year to date.

Molybdenum production in the form of metal in concentrate reached 190t 
for the quarter and 544t for the year to date.

As for exploration, in the nine months to the end of March the major had 
spent $US346 million ($A372 million) on its global search.

Shares in BHP were slightly up in morning trade to $A42.81.

----------------------

Olympic dam weighs as BHP Q3 iron ore output jumps 11%, but copper 
slumps 19%

The numbers, which trail those of Rio Tinto, disappointed some expectations

James Regan (Reuters) - 
http://www.mineweb.com/mineweb/view/mineweb/en/page67?oid=103017&sn=Detail&pid=92730

21 April 2010

SYDNEY - Global miner BHP Billiton posted an 11 percent annual rise in 
iron ore production in the March quarter, trailing a much faster 
expansion by rival Rio Tinto and disappointing some expectations.

It said copper production slumped 19 percent, primarily due to 
disruptions at its Olympic Dam mine, and foreshadowing weak figures for 
the quarter ahead as operations at the mine will not return to normal 
until the end of June.

Analysts said the iron ore figures did not alter the long-term picture 
and BHP was likely to maintain forecasts to lift iron ore output to 200 
million tonnes over the next two years as it looks to beef up activity 
to feed Asia's booming manufacturing.

Rio Tinto, which reported a 39 percent jump in iron ore production for 
the quarter, is also expanding, looking to lift capacity to 234 million 
tonnes by the end of this year.

"Quarter-on-quarter all the major units are down except petroleum -- 
that is iron ore, copper, coal and met coal," said Peter O'Connor a 
resources analyst for Bank America Merrill Lynch.

"On a year-on-year basis it looks okay, except for copper, but I think 
most people will be trimming earnings forecast just a bit on these 
numbers -- perhaps a cent or two (per share) but nothing major".

At 0243 GMT, BHP shares were flat while Rio Tinto was trading 0.5 
percent higher, trailing the broader market's 0.7 percent rise.

"There's not a lot of joy in terms of positive surprises," said Tim 
Schroeders, a portfolio manager at Pengana Capital, adding that copper 
figures were especially weak.

BHP's difficulties with the Olympic Dam mine, the world's fourth largest 
copper deposit, are likely to keep pressure on world supplies and also 
prevent the firm from taking advantage of a 5 percent jump in copper 
prices CMCU3 in the March quarter.

"Copper production was a bit light and that adds to the whole scenario 
that the supply side on the copper industry is very tight," said Michael 
Bentley, portfolio manager for Northward Capital.

Industrial action in Chile and mining of lower grade ores at the 
Escondida and Cerro Colorado mines in Chile and at Antamina mine in Peru 
also contributed to the drop in copper output, BHP Billiton said.

At Escondida, BHP Billiton's share of copper concentrate output rose 17 
percent to 101,500 tonnes, though cathode production dropped 20 percent 
to 36,200 tonnes.

Production of iron ore, BHP Billiton's top revenue earner, climbed 2.97 
million tonnes on the year to 31.16 million, although was down on the 
previous quarter, with the firm saying that weather related disruptions 
held back production.

A new pricing regime started on April 1, with reports that BHP is 
getting $131 a tonne for its ore under April-June contracts based on the 
average January-March average spot price -- more than twice last year's 
fixed price.

The price over the following three months will be determined by the 
indexed, or averaged, spot price between April and June.

U.S and European steelmakers are in early stages of recovery and China's 
appetite for imported ore, at least for now, refuses to abate, 
suggesting even higher prices next quarter.

Metallurgical coal production, another steel making raw material and a 
key commodity in Asia's economic boom, rose 7 percent but weather 
difficulties adversely affected output. (Additional reporting by Cecile 
Lefort and Bruce Hextall in SYDNEY and Victoria Thieberger in MELBOURNE; 
Editing by Balazs Koranyi and Michael Urquhart)




-- 

Andy Whitmore (Whit)
Indigenous Peoples Links (PIPLinks)
Communications and Research
Finspace, 225-229 Seven Sisters Road, London, N4 2DA
Ph / fax: + 44 (0)207 263 1002
Email: comms at piplinks.org  Web: http://www.piplinks.org


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