UPDATE: BHP Billiton To Buy Contract Mining Business In Australia
August 08 2011 - 9:16PM
Dow Jones News
BHP Billiton Ltd. (BHP) is moving to take control of its iron
ore mining operations in Australia's Pilbara region, signing an
agreement to buy for $735 million the mining equipment and staff
from a contracting company whose operations account for almost 70%
of BHP's mining of the steelmaking commodity.
"While this move to an owner-operator model will remove a layer
of complexity and costs from our business, the real focus of this
proposed transaction is the work force," said Ian Ashby, president
of BHP's iron ore division.
Ashby said taking over the contractor's business is a lower-risk
alternative than having to hire its own employees in Western
Australia state, which faces a labor shortage as mining and oil
producers compete for skilled workers.
The proposed deal is the second move this week by one of
Australia's major mining companies to consolidate operations in the
country at a time when global economic concerns have wiped billions
of dollars off stock exchange values and driven prices for
industrial commodities and oil lower. Rio Tinto PLC (RIO), together
with partner Mitsubishi Corp. (8058.TO), said Monday that it has
offered about $1.55 billion for the minority of shares currently
not owned to take coal producer Coal & Allied Industries Ltd.
(CNA.AU) private.
BHP said it has signed a preliminary agreement to buy the HWE
Mining subsidiary of Leighton Holdings Ltd. (LEI.AU) in a deal it
expects to close in the final quarter of the year, subject to due
diligence and regulatory approvals.
Leighton separately said the business, which services three of
BHP's operations in the iron ore-rich Pilbara, account for about
A$1.1 billion in annual revenue and A$1.4 billion of work in hand.
Leighton bought HWE Mining out of administration in 2006.
Leighton Chief Executive David Stewart said the company is in
the process of tendering for new mining contracts in Western
Australia and sees opportunities for work in Mongolia, southern
Africa and Southeast Asia that will maintain the company's position
as one of the world's largest contract miners.
-By Robb M. Stewart, Dow Jones Newswires; +61 3 9292 2094;
robb.stewart@dowjones.com
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