Disclosure: I own shares in one or more of the stocks mentioned. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

BHP Billiton: investing after a disaster

By Chris Bailey of Financial Orbit

9 November 2015 04:09

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There are some events which transcend normal investment analysis. The shocking scenes of devastation over the last few days from the area around the Samarco iron-ore mine in Brazil following the unintended release of mine tailings received a lot of press coverage. As the co-owner (along with the Brazilian business Vale) BHP Billiton (BLT) correctly in a regulatory disclosure earlier today ‘offered its full support to help the immediate rescue efforts and to assist with the investigation’ and made its ‘immediate priority…the welfare of the Samarco workforce and the local communities’. None of this of course will bring back those who have lost their lives.

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Comments

zach01

9 November 2015, 07:25

Chris, You should have pointed out, that BHP Billiton, was not the mine operator. The mine was operated by Samarco Mineracao, a Brazilian mining company, and a subsidiary of Vale.
Chris Bailey

9 November 2015, 11:17

@Zach01 – yes but you are missing the key investing point. A co-owner (as I correctly described Billiton) carries responsibility. This is why Billiton’s CEO has gone to the scene of the tragedy and why (from a very narrow finance perspective) the Billiton share price has underperformed peers like Rio Tinto in recent days.
alcira16247

9 November 2015, 12:30

Chris

As ever your articles are insightful and thought provoking.

Anyone brave enough to punt a few quid into BHP today could be locking into a very attractive income yield in excess of 8.5%…….. mmmmm…..nice!

Question is, Chris……. how likely is the company able to maintain the dividend, even if depressed marketing conditions endure? Have BHP the balance sheet strength?
zach01

10 November 2015, 08:33

Chris, Thank you for response. My post was not shown to preclude BHP, from any monetary damages. The post was clearly showing the mine was run solely by Vale. I was aware of the 50:50 partnership. Further, in todays Times, they report, already, the cost to BHP will be £1 billion, that would make the total damages of £2 billion.