BHP Billiton Digs Deep In Global Market
BHP BILLITON DIGS DEEP IN
GLOBAL MARKETS
Group2
Introduction
Leading global resources company
A primary listing on the Australian Securities
Exchange and has a premium listing on the
London Stock Exchange, with a secondary listing on the Johannesburg Stock Exchange
Two American Depositary Receipt listings on the New York Stock Exchange.
Purpose : create long-term shareholder value through the discovery, acquisition, development and marketing of natural resources. Why is the iron ore market a crucial one in today’s global economy?
Help company to withdraw the instability of commodities market
Great advantage : a strong market position Main ingredient in steel
One of the key commodities associated with industrialization ( manufacturing car or building skycrapers)
What impacts to the iron ore market would have resulted from a successful takeover of
Rio Tinto by BHP Billiton?
Control of about 75% of the seaborne iron ore Likelihood of iron ore price rocketing
Would it be preferable for iron ore to be priced on the old benchmark system, or on the new spot-price model, and why?
Benchmark system
New spot-price model
- a system of annual contract negotiations which set
'benchmark' prices
- with rising demand, these prices have lagged behind 'spot' prices which obtain in commodity markets - The mining companies have lost money, as their prices were effectively capped when dealing with major customers.
- steep price rises in iron ore globally - for Asian economies, these rises could possibly be absorbed, for
European manufacturing, with its fragile steel industry, the price rises would be damaging.
- The European steel industry complained in 2010 to the EU
Commission about possible 'illicit coordination of price increases' by the big mining companies (Financial
Times, 1 April 2010).
GLOBAL MARKETS
Group2
Introduction
Leading global resources company
A primary listing on the Australian Securities
Exchange and has a premium listing on the
London Stock Exchange, with a secondary listing on the Johannesburg Stock Exchange
Two American Depositary Receipt listings on the New York Stock Exchange.
Purpose : create long-term shareholder value through the discovery, acquisition, development and marketing of natural resources. Why is the iron ore market a crucial one in today’s global economy?
Help company to withdraw the instability of commodities market
Great advantage : a strong market position Main ingredient in steel
One of the key commodities associated with industrialization ( manufacturing car or building skycrapers)
What impacts to the iron ore market would have resulted from a successful takeover of
Rio Tinto by BHP Billiton?
Control of about 75% of the seaborne iron ore Likelihood of iron ore price rocketing
Would it be preferable for iron ore to be priced on the old benchmark system, or on the new spot-price model, and why?
Benchmark system
New spot-price model
- a system of annual contract negotiations which set
'benchmark' prices
- with rising demand, these prices have lagged behind 'spot' prices which obtain in commodity markets - The mining companies have lost money, as their prices were effectively capped when dealing with major customers.
- steep price rises in iron ore globally - for Asian economies, these rises could possibly be absorbed, for
European manufacturing, with its fragile steel industry, the price rises would be damaging.
- The European steel industry complained in 2010 to the EU
Commission about possible 'illicit coordination of price increases' by the big mining companies (Financial
Times, 1 April 2010).