Miner BHP Billiton postpones Olympic Dam Mega-Project

The Olympic Dam was supposed to be a $30bn project. The idea was to create the world's largest copper and uranium mine, in the heart of the Outback in South Australia. Now this has been put on the back-burner and what's more, no new projects are supposed to be approved till June 2013. This decision has already led to a cut in BHP's workforce in Adelaide, a coastal town in South Australia. Part of this aversion to capital spending is the 35% drop in profits this year although some news channels suggest mining taxes may have played a factor.

It is worthwhile considering the Board of Directors of BHP Billiton. Among them is Lebanese-born Jacques Nasser, the former Chief Executive of Ford Motor Company from 1998 to 2001, who received a $17m golden handshake when he left in October 2001. Marius Kloppers is the Chief Executive of BHP and holds a PhD from MIT in Materials Science and an MBA from INSEAD. Before becoming CEO, Marius circulated through various roles at BHP including Chief Marketing Officer and Chief Commercial Officer.

BHP is involved in onshore gas development of shale resources in the United States and affected by gas prices. In 2012 it has spent just over $3bn developing these resources. Over half its drilling activity takes place in Eagle Ford. In 2013 it expects to spend $4bn further developing these assets. Chesapeake (NYSE:CHK) is especially active in Eagle Ford with 550,000 acres (although most of the production is oil rather than gas). Exxon, ConocoPhilips and Occidental Petroleum have also entered Eagle Ford.

BHP is also undertaking appraisal drilling in the 440,000 acres of the Permian basin (part of Western Texas and South Eastern New Mexico) to evaluate its potential for producing shale liquids. Estimated output is currently around 100Mboe.

This gives us some idea of costs, but what about cash flow? Here are some findings from Graham Kerr's presentation for FY2012. EBIT margin was 39% - this means roughly 39% of revenues weren't consumed in expenses. H2 net operating cash flow was $12bn, slightly lower than in H1.

The history of BHP is a fascinating one. It was formed from the merger of BHP (Broken Hill Proprietary) and Billiton, originally a tin mine on the Indonesian island of Beilitung. Later Billiton expanded into bauxite, first on Bintan and then later in Suriname, leading a largely independent life until its acquisition by Royal Dutch Shell in 1970. When BHP and Billiton merged in 2001 it was dual-listed on both the LSE (BLT) and Australian stock exchanges (BHP) including ETOs.

What is the market capitalisation of BHP? That depends on what exchange you are looking at. Its UK listing is worth about £38bn (Aug 2012).

What about ADV of BHP? On the LSE, it's about 10,000, which means monthly will be roughly 300k.

Deutschland retains S&P AAA Rating

Rating for long-term debt, maintained thanks to "highly diversified and competitive economy". Merkel says German economy is "very sound". Debt is currently 80% of GDP. The German economy is the world's third largest exporter (includes exports to the EU). This includes exports of automobiles from Volkswagen, Daimler and BMW, which constitute around 9% of exports by value.

LME Copper and the Eurozone

How can what happens in the Euro "zone" affect what happens to the copper price? Well, on Friday 29 June  2012, it did just that - with the biggest daily rise posted since April - up 2.2% on the 3 month contract at around half seven AM (GMT) . The traded price was $7,545 per tonne.

Copper trades on the Shanghai (SHFE), LME and COMEX exchanges. (COMEX also offers trading on e-Mini copper futures). In India, copper trades on the NMCE and the MCX.

GM, Enjoying the Escalade?

From total disaster in 2008, GM climbed to number 5 in the Fortune 500 in 2011. In the words of Fortune Magazine: "Detroit has staged a comeback". Profits were up 49% from 2010. Around March 2012, GM had around $40bn of market cap.

General Motors owns the classic American brands like Chevrolet, Buick, Cadillac as well as the European brand Vauxhall. Vauxhall is a British brand that was acquired by GM as early as 1925 and originally started as a marine engine manufacturer. It is headquartered in Luton, Bedfordshire, 30 miles North of London.

GM have a new luxury SUV for 2012, the Cadillac Escalade.

UK Property Owner Crowned with New Profits

Super-prime properties performed really well for the owner of Regent Street (and promote of Regent's Quadrant 3 Scheme in which £300m was invested) as the value of the Crown Estate's property portfolio surged to £8bn for the first time. Net profit was up 4% from the previous year and the Treasury (by which, of course, one refers to Her Majesty's Treasury) gave a sign of glee. The Crown's Marine Estate that owns most of the UK coastline also profited from investment in wind farms (generating 1.5% of the UK's electricity!!!).

TI-Brent Spreads Stable Despite Destruction in Brent

The Eurozone crisis had its part to play in the fall in energy prices in May 2012 (over 4% drop) which are, to some extent, reflective of the global macro-economy.

Nevertheless, the spread of TI-Brent, around 12.55 has not changed as visibly, although it was wide at 20.8 on April 4, 2012, but this extremity was short-lived, and the spread narrowed fairly rapidly after that. The previous major widening was Oct 2011, when the spread was 26.

Facebook - America's Biggest (but not Best) Tech IPO

Facebook has become the biggest technology IPO in US history. The flotation was done on Nasdaq - with 80 million shares being traded in 30 seconds. It's opening price at $38 a share resulted in a valuation of $100bn. On Monday, it's first day of trading, the stock closed almost $4 below the IPO price, and fell again Tuesday.

Pre-IPO Facebook paid over $1bn for photo-sharing program Instagram.

Facebook was a loss-making business until 2009, when revenues reached $229m mainly from advertising.