BBL BHP Group Plc

   (FROM THE WALL STREET JOURNAL 3/17/16) 
   By Rhiannon Hoyle 

MELBOURNE, Australia -- BHP Billiton Chief Executive Andrew Mackenzie has spent three years tackling the legacy of his predecessors' hunger for significant deals, selling unwanted assets and taking multibillion-dollar write-downs on its U.S. shale-gas operations.

Now, he says the world's biggest mining company by market capitalization has an appetite for acquisitions again.

In an interview, Mr. Mackenzie said BHP is sizing up deals for petroleum and copper assets that could offer an immediate boost to profit amid what the company now expects to be a prolonged period of low commodity prices.

"We are very active in looking at areas where we might acquire assets that would fit very well within our portfolio and that would increase the scale of the company without increasing its complexity," he said.

Mr. Mackenzie was speaking after a difficult period for BHP as it adapts to a slide in prices for the main commodities it sells, including iron ore, oil and gas, and coal.

Some analysts have warned BHP could be tempted to overpay for assets, while others question whether there will be willing sellers of the sort of high-quality assets that BHP has historically been eager to buy.

Last month, the company slashed its dividend by 74%, abandoning a long-held pledge to keep its annual payout steady or rising, as it announced a $5.67 billion loss for the six months through December.

In November, a dam burst at the company's jointly owned Samarco iron-ore mine in Brazil caused widespread environmental damage.

BHP's share price is down nearly 50% over the past year, while Moody's Investors Service and Standard & Poor's Ratings Services have both recently cut their credit ratings on the company, to A3 and single-A, respectively.

Mr. Mackenzie said "Plan A" for BHP remains its drive to lower costs and raise productivity, in part by cutting an as-yet-unspecified number of jobs, particularly in head-office roles.

But he said savings from reducing its dividend, along with extra cash the company could generate as it works existing operations harder, could give BHP the firepower to pursue acquisitions. Some of BHP's rivals, such as Anglo American PLC and Vale SA, recently said they might sell assets to help shore up their balance sheets.

"At this point in the cycle, a company like us -- that is doing a good job on productivity, that has now got a very fit-for-purpose dividend policy and the financial flexibility that goes with it -- could well be a beneficiary of other companies that are not as well-placed as us," Mr. Mackenzie said. "And we certainly wouldn't want to miss out on those benefits."

Mr. Mackenzie declined to comment on analysts' forecasts that BHP could spend as much as $5 billion on an acquisition. He said he was "very keen to stress that it is perfectly possible that nothing will emerge that will pass our tests" and said the company also could use spare cash to pay down debt.

(END) Dow Jones Newswires

March 17, 2016 02:47 ET (06:47 GMT)

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