We interrupt our regularly scheduled blogging to bring you this mining bulletin.
The CEO of BHP Billington is stepping down to be replaced on October 1, 2007 by the current head of their non-ferrous division, Marius Kloppers.
BHP is currently the third largest producer of copper in the world and that's not even their primary industry. Their first love is for iron ores. Nevertheless, with the new CEO at the helm it is likely that they will be in M&A mode. I can't see them wanting to try and come back into America after their failed purchace of Magma in the late 90's (they purchased Magma when copper prices were trending downward, then closed all of their newly aquired properties permenantly and wrote off the loss only one year before copper started swinging back into profitable territory); however, I can see them ramping up foreign operations or acquisitions.
Why should you care? Actually, for the typical consumer a bigger BHP will probably translate into slightly cheaper copper products as they increase production in their most profitable operations; ie, third world operations.
Why do I care? I currently am employed at one of the least profitable copper operations in the world (but because copper prices are so high, we are still extremely profitable.) I worry that a bigger BHP will translate into a greater world supply that will lift world inventories thereby pushing prices down and price my mine out of operation.
Honestly, any big news like this in the copper business is interesting to a miner like me.
Sorry if I've bored your pants off. ... You can put them back on now, this isn't that kind of a website.
About Me
- Papa J
- Latter-Day Saint. 10 hour work days, daily scripture reading, rusty Italian, underdeveloped Spanish, working on my MBA, six children who fill up my life, wonderful wife who anchors us all. Great church full of true friends and followers of Christ.
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3 comments:
Do you get to wear a cool hardhat and carry a pick around or are you just one of those engineers? If I were into the commodities market this would be useful, however I am too chicken for that game. All kidding aside how is a mines profitabilty measured - is it simply a ratio of usable ore per ton of earth mined or what?
So what are the primary uses for copper, other than the obvious?
I know lots of people use copper bracelets for health reasons.
BCF - Yes I wear a hardhat...and safety glasses with sideshields, steel toe boots, and an orange vest, but I work in an open pit mine so no head light. And yes, I am one of those engineers... But not really. I'm a compliance specialist. My degree is in Geology. Usable ore at the current price of copper (~$3.50/lb) is actually a really low grade copper, probably around 2/10% copper would be viable. Then every percentage above that brings you to more and more profitability. My company is making incredible profits right now. Then, when commodities dip, by company will hold on by its fingernails to try and remain viable until the next upturn.
Incongnito - The primary uses for copper are the obvious. I could go on and on about why we need copper but the best thing I can do is refer you to copper.org. Tons of useful information there.
China is using the most copper right now, with India in a close second.
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