Morningstar | Further Supply Disruptions to Boost Near-Term Iron Ore but Declining Steel Demand in China Looms
BHP has several of the world's largest mines. Key mined commodities are iron ore, coking coal, and copper. In addition, the company has meaningful oil exposure with conventional petroleum, and liquefied natural gas, or LNG, assets. Onshore U.S. shale assets were sold in 2018. The iron ore mines in particular are at the low end of the industry cash cost curve; however, overinvestment during the peaks of the China boom, when capital costs were very high relative to historical standards, has diluted expected future returns. After adding back the not-inconsiderable write-downs, BHP’s invested capital base nearly quadrupled in the decade-ended 2015, substantially lowering returns such that we expect adjusted midcycle returns below the company's cost of capital. Excluding impairments, we forecast midcycle returns to approximately match BHP's cost of capital.BHP Billiton is a resources company. Co. extracts and processes minerals, oil and gas, primarily in Australia and the Americas. Co. operates four reportable segments: Petroleum, which is engaged in the exploration, development and production of oil and gas; Copper, which is engaged in the mining of copper, silver, lead, zinc, molybdenum, uranium and gold; Iron Ore, which is engaged in the mining of iron ore; and Coal, which is engaged in the mining of metallurgical coal and energy coal. Co.'s Petroleum unit comprises conventional and unconventional oil and gas assets, and includes exploration, development and production activities.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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