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On 29 June 2001, BHP Billiton was set up through the Dual Listed Companies (DLC) merger of BHP Limited (now BHP Billiton Limited) and Billiton Plc (now BHP Billiton Plc).
Their major products businesses, including aluminium, energy coal and metallurgical coal, copper, manganese, iron ore, uranium, nickel, silver and titanium minerals, and have substantial interests in oil, gas, liquefied natural gas and diamonds.
The Group is headquartered in Melbourne, Australia, and consists of the BHP Billiton limited Group and the BHP Billiton Plc Group as a combined enterprise. BHP Billiton limited and BHP Billiton Plc have each retained their separate corporate identities and maintained their separate stock exchange listings, but they are operated and managed as if they are single unified economic entity, with their broads and senior executive management comprising the same people.
BHP Billiton limited has a primary listing on the Australian Securities Exchange (ASE) in Australia. BHP Billiton Plc has a premium listing on the London Stock Exchange (LSE) in the UK and a secondary listing on Johannesburg Stock Exchange in South Africa. In addition BHP Billiton limited American Depositary Receipts (ADRs) and BHP Billiton Plc ADRs trade on New York Stock Exchange (NYSE) in US.
They operate nine businesses, called Customer Sector Groups (CSGs), which are aligned with the commodities we extract and market:
ï¿½ Base Metals (Including Uranium)
ï¿½ Diamonds and Specialty Products
ï¿½ Stainless Steel Materials
ï¿½ Iron Ore
ï¿½ Metallurgical Coal
ï¿½ Energy Coalï¿½
(BHP Billiton Annual Report 2010)
(BHP Billiton Annual Report 2010)
For the year ended 30 June 2010, they reported total revenue US$52,798 million, profit from operations US$20,031 million. Profit attributable to shareholders of US$12.7 billion Among them Iron Ore operation was significant, generating the most revenue US$11,139 million and the most profit US$6,001 million.
Iron Ore operation in Western Australia generated the most revenue US$9,884 million, US$5,588 million of that being profit. The remaining revenue was produced from operations in Samarco, Brazil. In 2009 they officially opened the Newman mining hub, which belongs to Rapid Growth Project 4.
Iron Ore has been good business in past few years; therefore they still expect increasing in the future. In November 2008 they spent US$4.8 billion for Rapid Growth Project 5 and now the project 5 is under construction.
In January 2010 they spent continuously US$1.93 billion to Rapid Growth Project 6, this capital will allow continuing the expansion of the inner harbour at Port Hedland, and expanding the mining operations.
(BHP Billiton Annual Report 2010)
Mining has been a good business in the past few years, thanks largely to China. Once a minor consumer, that country is now hungry for metal to reinforce its office buildings and keep its factories humming. In 2009 China nabbed fully 67% of all internationally traded iron ore.
(The Economist, 2010)
(BHP Billiton Annual Report 2010)
BHP Billitonï¿½s remarkable growth has been driven by luck, shrewd deal making and, above all, Chinaï¿½s demand for steel.
The proportion of its revenues that come from iron ore, metallurgical coal and stainless-steel ingredients rose from 34% in 2007 to 39% in 2009. The company is handily positioned to benefit from Chinaï¿½s growth, which is heavily dependent on steel.
(The Economist, 2010)
2. Corporate Responsibility
ï¿½Our Charter acknowledges that we must earn the trust of our communities, employees, customers and our many other stakeholders, by consistently delivering on our commitments. Ensuring the transparency of those commitments is also recognised as a key to our prosperity.ï¿½(BHP Billiton annual report 2010)
Climate change policy
1. Understanding emissions from the full life cycle of our products.
2. Improving the management of energy and greenhouse gas emissions across our businesses through innovation in energy and operational efficiency. Setting up group targets to reduce greenhouse gas emissions.
3. Committing US$300 million over the next five years to support industry research, development of low emissions technology, internal energy excellence projects and encourage emissions abatement by our employees and our local communities.
4. BHP Billiton is working with governments and other stakeholders on the development of effective and equitable climate change policies including market-based mechanisms such as emissions trading.
In order to make sure their policy BHP Chief executive officer Marius Kloppers has committed to working with governments on the design of effective policies to help reduce greenhouse gas concentrations in the atmosphere, Chief executive officer of the Melbourne-based company, said today in an industry briefing in Sydney. ï¿½Our preferred solution is the introduction of an international climate framework, which includes binding commitments by all developed and major developing economies to reduce greenhouse gas emissions.ï¿½
BHP understands that any project they undertake impacts the environment in which they operate. For each new project, they aim to identify and communicate with community members who will be affected by its activities. By keeping open communication, BHP hopes to minimize negative social impact and maintain a positive presence within the community.
(BHP Billiton Annual Report 2010)
The BHP Billiton community programs manage key partnerships in Australia, international community and non profit organizations. Annually for up to three year, they spent AUS50, 000-AUS200,000 for community programs.
The project focuses on sustainable long term social and environment in Australia and international community.
The project provides in arts and culture which benefited rural and distant community. The education training provide for pupil, student in science, technology and business. Leadership program for young people. .
The community capacity building provides for disadvantaged young people, reducing disaster in locations where BHP Billiton employees work. They create development programs for local communities where they operate. They also focus on medical research, heath and environment.
in FY2009, they established a UK-based charitable company (BHP Billiton Sustainable Communities) to help us manage their fund and contributed US$80 million to the charitable company in FY2010 and this is included in the Companyï¿½s total community investment.
3. Crisis Management
Effectiveness of systems of internal control and risk management
In delegating authority to the CEO, the Board has established CEO limits set out in the Board Governance Document. Limits on the CEOï¿½s authority require the CEO to ensure
that there is a system of control in place for identifying and managing risk. The Directors review the systems that have been established for this purpose and regularly review their effectiveness. These reviews include assessing that processes continue to meet evolving external governance requirements. In undertaking this role the reviews the following:
ï¿½ ï¿½Procedures for identifying business risks and controlling their financial impact on the Group and the operational effectiveness of the policies and procedures related to risk and control;
ï¿½ Budgeting and forecasting systems, financial reporting systems and controls;
ï¿½ Policies and practices put in place by the CEO for detecting, reporting and preventing fraud and serious breaches of business conduct and whistle-blowing procedures;
ï¿½ Procedures for ensuring compliance with relevant regulatory and legal requirements;
ï¿½ Arrangements for protecting intellectual property and other non-physical assets;
ï¿½ Operational effectiveness of the Business Group RAC structures;
ï¿½ Overseeing the adequacy of the internal controls and allocation of responsibilities for monitoring internal financial controls;
ï¿½ Policies, information systems and procedures for preparation and dissemination of information to shareholders, stock exchanges and the financial communityï¿½.
The Chinese market has become a significant source of global demand for commodities. In CY2009, China represented 56% of global seaborne iron ore demand, 36% of copper demand, 35% of nickel demand, 39 %of aluminium demand, 42% of energy coal demand and nine per cent of oil demand. Chinaï¿½s demand for these commodities has been driving global materials demand over the past decade. The strong economic growth and infrastructure development in China of recent years has been tempered by the global financial crisis. Sales into China generated US$13.2 billion (FY2009: US$9.9 billion), or 25.1 per cent (FY2009: 19.7 per cent), of our revenue in the year ended 30 June 2010. A slowing in Chinaï¿½s economic growth could result in lower prices and demand for our products and therefore reduce our revenues. (bhpbilliton.com, 2010)
21 January 2009, BHP Billiton announced to cut 6000 jobs caused by the global financial crisis and the slowing of China's economy. In relation to sharp drops in demand over the last three months, the company has been forced to slash 6000 jobs and closed Ravensthorpe nickel mine . The company blamed its decision to mothball its Raventhorpe operations on the falling nickel price. Jobs cuts have affected locations around the globe with 3,300 of the jobs cut being in Australia, 2,000 from Chile and 550 from the United States.
"These are very serious types of decisions and we don't take them lightly, but at the end they are necessary and they are the correct decisions," Mr Vanselow said.
"We have also been quick to take appropriate action to respond to market conditions, such as the previously announced production adjustments and project withdrawals, and we will continue to do so if required."Chief executive Marius Kloppers said
ï¿½Our strategy is clear and remains unchanged since 2001. We focus on large, long-life, low-cost, upstream, high-quality assets, diversified by commodity, geography and markets.
This strategy means more predictable business performance over time which, in turn, underpins the creation of value for our shareholders, customers, employees and, importantly, the communities in which we operate.ï¿½ (bhpbilliton.com, 2010)
In order to meet these characteristics they have a lot of growth options, many projects can be expanded to ensure they can supply product for increasing demand.
With good financial capability allows them to spend investment dollars on assets they know well. They have 28 projects in either execution or feasibility, which represents an expected capital investment of US$24.8 billion. They also have other medium-term growth options with expected capital commitments in excess of US$90 billion.
The main market BHP has focused on past a few years in China and India, Japan, Latin America, United State and Europe, which will continue to drive a strong demand for our products. India's economy is only one quarter the size of China's, even though its population is about 90 per cent of China's. Many analysts predict that India's growth rate could be similar to that of China's in the next few years.
Urbanisation and industrialisation are the key drivers that are transforming the lives of people in China and India. They are also seeking opportunities in other emerging countries like Brazil, Russia and the fast developing countries including Indonesia, Mexico and Turkey.
In order to diversify by commodity for increasing demand, they have to have mergers and aacquisitions another companies.
On 8 November 2007, BHP Billiton announced it was seeking to purchase rival mining group Rio Tinto Group in an all-share deal. the bid was withdrawn on 25 November 2008 due to a global recession. (Bloomberg.com, 2008)
In January 2010, after BHP Billiton bought Athabasca Potash for $320m, The Economist reported that by 2020, BHP Billiton could produce approximately 15% of the world demand for potash. (Economist.com, 2010)
In August 2010, BHP Billiton made a hostile takeover bid worth $40 billion for the Potash Corporation of Saskatchewan in Canada. This acquisition would diversify its business away from resources. But reject by Industry Minister Tony Clement said that it would not benefit to the country. (cbc.ca, 2010)
5. Vision, Mission, Goals
ï¿½Our purpose is to create long-term value through the discovery, development and conversion of natural resources, and the provision of innovative customer and market-focused solutions.ï¿½ To achieve real growth, they must: Actively monitor and set up their portfolio of high quality assets and services. Make a high performance organization where individual accepts responsibility and is offered for results. Interest the trust of employees, customers, suppliers, communities and shareholders by opening communications and consistently delivering on commitments. (bhpbilliton.com, 2010)
At BHP Billiton their mission is creating sustainable value for our shareholders, employees, contractors, suppliers, customers, business partners and host communities. They aspire to Zero Harm to people, their host communities and the environment and strive to achieve leading industry practice. Sound principles to govern safety, business conduct; social, environmental and economic activities are integral to the way we do business. (bhpbilliton.com, 2010)
BHP Billitonï¿½s goal for any project is Zero Harm to employees, communities, contractors, in safety management system, challenging best practices is critical part of overall process. At BHP Billiton they improve on best practice through timely and accurate reporting. From that they have experiences and help them find out better safety practices. The challenge is helping employees see reporting as not highlighting a failure but instead revealing an opportunity, which ultimately increase the level of reporting. Reporting incidents take courage; to make improvements they must first address that initial feeling of highlighting a failure and instead focus on what they can do to improve the situation and be proud of what they accomplish. (bhpbilliton.com, 2010)
To motivate employees they have commitments to health, safety, environment responsibility and sustainable development. They excite and fulfil of achievement superior business results and increasing their ability. Employees have relationships which focus on the creation of value for all parties. Developing and retaining talented employees, as evidenced by our long track record of global recruitment. To enable all employees to embrace their responsibilities, they require leaders to visibly hold themselves and others accountable for living our Company values as outlined in Charter; to put safety first; to make people a priority; and to be functionally excellent and work with discipline to deliver what we agree
6. Desirability as an employee
After researching BHP Billiton, I recognized that it is the worldï¿½s largest diversified natural resources company. It has clear vision, mission and strategy for growth, It not only makes profit for shareholder but also does well corporate social responsibility. It has clear policies for climate change to prevent greenhouse gas emission, policy for community development focusing on stainable long term social and environment in which their business operate. It also contributes charity to make community better.
Especially, its people strategy is to put safety first, to make people a priority, developing and retaining talent employee. With these conditions, I would like to work for this company for sure.