bhP BILLITION
...self. It combined a powerful natural resource company (BHP) with a powerful mining company (Billiton) to form BHP Billiton a relatively new company, with much potential (Haddock) . It became the world’s largest diversifies resource companies (Olijnyk). In 2001, it claimed to have an enterprise value of $35 billion. It has shares in both the UK and Australian international stock markets (Williams-merge). BHP Billiton is able to operate as a single economic body while retaining legal entities in two countries (Haddock). I believe that this company has more potential to compete effectively in the metals and mining industry than it does to be unsuccessful. The articles that I read about BHP Billiton led me to conclude that this company is doing relatively well for itself. In 2001it announced its decision to expand on its Mozal project to form Mozal 2. Mozal 1 produces low cost and high quality aluminum and was a technical and commercial success. BHP Billiton holds 47.11% interest on Mozal 1 (Williams- Mozambique). Another relatively new asset to BHP Billiton that has potential for long term sales and earnings is the Ekati diamond mine in Canada. BHP Billiton Diamonds Inc. developed it in partership with Dia Met Minerals Ltd. In mid-2001 BHP bought out Dia Met to make it a private owernship. Ekati is Canada’s only diamond mine, putting Canada on the world ‘s diamond map in 1998. Canada may some day be the top producer of diamonds in the world. Ekati processes 9,000 tons of kimberlitic a day and is estimated to bring in annual cash flow of $300 million. It accounts for 6% of the world’s diamond production , estimated to be more than $7 billion a year. It earns $170 per each diamond carat, while it only costs $65 to mine each. Ekati is thought to last 19 years, or maybe even 25. This of course makes BHP Billiton sound like it has an excellent business going on in Canada. But is has competition up and coming. International diamond companies have their eyes on Canada. Diavik and UK based Rio Tinto PLC are looking to begin operations at Snap Lake. Snap Lake could bring in 2-3% of the world’s diamond production annually. Ekati does have an advantage over Diavik. Diavik sits under a lake, so it will cost more to drill the mines (Olijnyk). Another assest to BHP Billiton is more discovery of gas in Trinidad and Tobago waters, but more importantly the discovery of high-quality oil. This is the first oil strike in Trinidad in 33 years. The discovery of oil is more important than gas because the finding of gas is almost routine. BP, which is the l...