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BHP Billiton

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BHP Billiton is the result of two companies that merged in 2001: Broker Hill Proprietary Co. (Australia) and Billition Co. (U.K). It is one of the world’s largest producers of primary resources, with its facilities for products such as aluminum, base metals, iron ore, diamonds and specialty products, energy coal, manganese, metallurgical coal, petroleum, and stainless steel. [1]

As a dual listed company, more than 38,540 people are employed in more than 100 operations crossing 25 countries throughout the world. BHP Billiton capitalized the market at more than US$165 billion and generated, in whole (including jointly controlled entities), a revenue of US$47.5 billion.[2]

Contents

[edit] History

[edit] Billiton Co.

Billiton Company can be traced back as far as September 29, 1860 when shareholders of the Het Groot Keizerhof Hotel in the Netherlands approved of the articles of association at a meeting. Two months following this event, the company acquired the concession to an island located in the Indonesian archipelago, near Sumatra. The island, called Billiton at the time, was rich in tin resources. The island has since changed its name to Belitung. This acquisition marked the establishment of the Billiton Co.

When Billiton was formed, it focused primarily on tin and lead smelting in The Netherlands. In the 1940s, it also opened to mining bauxite in Indonesia and Suriname. Billiton was purchased by the Royal Dutch/Shell group of companies in 1970, a move that gave it the opportunity to continue production of tin and lead.

The company history before the merger in 2001 consisted of expanding to aluminum smelters in South Africa and Mozambique; nickel in Australia and Columbia; base metal mines in South America, Canada, South Africa; and coalmines in Australia, Colombia, and South Africa. It also opened operations in Brazil, Surinam, Australia, and South Africa and was placed on the FTSE 100 Index in 1997.[3]

Before Billiton merged with BHP, it was one of the largest producers in the metals and mining industry, as well as a major producer of aluminum and alumina, chrome and manganese ores and alloys, steaming coal, nickel, titanium minerals, and copper.

Billiton Co. employed approximately 30,000 people throughout the world. With headquarters in London, it had development projects in Australia and North and South America, as well as parts of southern Africa. A merger with BHP, a major Australian company, was the solution to expansion in the natural resources market.

[edit] BHP Co.

The history of BHP goes almost as far back as Billiton's, with its incorporation as a company in 1885. Upon the discovery of a silver, lead, and zinc mine in Broken Hill, New South Wales, Australia, BHP was formed. At the time of the company's incorporation, the mine was one of the most prosperous and rich deposits in the world and described by the London press as the “best managed mine in the world.”[4]

The end of the 19th century marked the beginning of growth for BHP. Four years after its incorporation, BHP opened up an iron ore mine located at Iron Knob in South Australia. This eventually led to BHP’s decision to manufacture steel. The first project it embarked upon was steelworks at Newcastle in New South Wales in 1915.

Like many companies during World War I, BHP had very little activity as most companies were focused on the war effort. After the war, BHP continued to grow by the formation of a shipping fleet and through additional acquisitions. Its acquisitions were specific to manufacturers of finished steel products. This led the steel production plant to grow even further, especially by 1935 when BHP purchased Australian Iron and Steel, as well as Port Kembla steelworks. The company's growth extended further when it took on blast furnace and shipbuilding facilities at Whyalla, South Australia, as well as beginning the production of petroleum after a massive oil discovery in Bass, Strait, off the coast of Australia.

The '70s and '80s were about acquiring rather than branching into different markets and industries. A number of purchases saw BHP acquire Utah International and take on coalmines in New Mexico and Queensland. The company even discovered a copper mine in Chile—the Escondida Mine—while further branching out into the production of petroleum and steel. The discovery of new mines led to the production of other products, such as silver, lead, and zinc.[5] Its most well-known mine discovery was the EKATI Diamond Mine, made famous for being the first diamond mine in North America to employ both open-pit and underground mining methods.[6]

The company prided itself in the exploration, discovery, and production of iron ore, coal, copper, oil and gas, diamonds, silver, lead, zinc, and other natural resources throughout the world. In its prime, BHP was also a top producer of value-added flat steel products.

With headquarters in Melbourne, Australia, it employed around 30,000 people throughout the world. Its merger with Billiton Co. drew some criticism, despite it being a successful and prosperous venture.

[edit] Merger: BHP Billiton

The BHP and Billiton companies merged in 2001, a move that had critics in the business world worried that BHP would become less Australian and that the “Big Australian,” a term coined for BHP, would cease to retain its national character in a bid to adapt to the corporate world and lifestyle to that of Billiton. Despite concerns, the merger increased the company’s worth to $57 billion, making it one of the largest companies in global mining, competing for the top spot with rival Alcoa.[7]

[edit] Ok Tedi Mine Controversy

BHP Billiton came under criticism for stepping out of the Ok Tedi mine in Papua New Guinea. The mine, which opened in 1984 under BHP, did not bring forth the prosperity expected. Eighteen years after it opened, it is now a hazard not only to the environment, but also to the company, both socially and financially. BHP Billiton’s bid to exit the mine came under fire by the creation of new laws made by the PNG government that would allow it to abandon the mine. The mine’s misfortune began with a massive landslide that prevented engineers from building a tailings dam and other structures with which to store waste. The inability to build as such resulted in more than 80,000 tons of waste rock being poured into the Ok Tedi river. To this day, waste rock is being dumped into the river.[8] The problems encountered led to BHP Billiton being sued by aboriginals who inhabited by the area. BHP lost the case.[9]

[edit] The Company Today

Today, BHP Billiton, with headquarters in Melbourne, Australia, is one of the largest global producers of natural resources and is listed on the Australia, London, and New York stock exchanges. Under the management of CEO Marius Kloppers and chairman Don Argus, the production range of BHP Billiton includes oil and gas, aluminum, copper, nickel, iron ore, manganese, metallurgical coal and energy coal, as well as uranium, gold, zinc, lead, and silver.

One factor that has significantly affected the business of BHP Billiton is its aggressive bidding for Rio Tinto, a move that has yet proved unsuccessful. Rio Tinto adamantly rejected several bids on behalf of BHP Billiton for being significantly under-priced. [10]

[edit] References

  1. Our Businesses. BHP Billiton, 2008-09-29.
  2. Key Information. BHP Billiton, 2008-09-29.
  3. Billiton History. BHP Billiton, 2008-09-29.
  4. Billiton History. BHP Billiton, 2008-09-29.
  5. Billiton History. BHP Billiton, 2008-09-29.
  6. Parker, G. Brian. A Diamond in the Rough. Point of Beginning, April, 2006. (accessed: 2008-09-29)
  7. BHP-Billiton merger confirmed. ABC.net, March, 2001. (accessed: 2008-09-29)
  8. Henry, Don. Leaving the scene of the mine. Australian Conservation Foundation, 2008-09-29.
  9. Imhof, Aviva. The big, ugly Australian goes to Ok Tedi. Multinational Monitor, March, 1996. (accessed: 2008-09-29)
  10. Freed, Jamie. BHP makes bid for Rio. Business Day, February, 2008. (accessed: 2008-09-29)

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