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Market: LSE, ASX, JSE, NYSE
Sector: General Mining
Epic: BLT
News: Latest news
Web Site: BHP Billiton
Other Articles: 11-02-201002-02-201029-01-2010

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White Energy Company (ASX: WEC; OTCQX: WECFY) has inked a non-binding heads of agreement with state owned Guodian Inner Mongolian Energy Sources Co Limited to develop a coal upgrading [...]

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BHP Billiton

BHP Billiton

BHP Billiton (ASX:BHP) is a global leader in the resources industry.

Formed from a merger between BHP and Billiton, the company is a leader in the extraction and sales of most natural resources, and is particularily strong in Iron Ore, Coking and Thermal Coal, Copper, Zinc, Oil & Gas, Diamonds and most materials key to the production of steel.

Friday, June 05, 2009

BHP Billiton and Rio Tinto to combine Western Australian iron ore assets into global colossus

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BHP Billiton (ASX: BHP) and Rio Tinto (ASX: RIO) have surprised the market with a signed a non-binding agreement to establish a production joint venture covering the entirety of both companies’ Western Australian iron ore assets.

Both companies are in a trading halt.  

The joint venture will encompass all current and future Western Australian iron ore assets and liabilities and will be owned 50:50 by BHP Billiton and Rio Tinto.

The joint venture is expected to unlock significant value from the companies’ overlapping, world-class resources. Both companies believe the net present value of these unique production and development synergies will be in excess of US$10 billion (100 per cent basis). These substantial synergies are anticipated to come from:

- Combining adjacent mines into single operations;
- Reducing costs through shorter rail hauls and more efficient allocations of port capacity;
- Blending opportunities which will maximise product recovery and provide further operating efficiencies;
- Optimising future growth opportunities through the development of consolidated, larger and more capital efficient expansion projects;
- Combining the management, procurement and general overhead activities into a single entity.

The joint venture will operate as a cost centre and deliver iron ore, in equal volumes, to ships designated by BHP Billiton and Rio Tinto to sell independently through their own marketing groups. In order to equalise the contribution value of the two companies, BHP Billiton will pay Rio Tinto US$5.8 billion for equity type interests at financial close to take its interest in the joint venture from 45 per cent to 50 per cent.

Break fees of over $250 million will be paid if either party breaks the agreement.

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