Discuss About The Mineral Resource And Ore Reserve Estimation?
Business strategy sets out for achieving desired objective. It is defined as a long term business planning. A business approach generally covers a period of around 3-5 years and at times even longer. BHP Billiton is one of the greatest leading resources Company. This company extract and process minerals, oil and gas, and more than 60,000 workers and contractors works in Australia and America. This company product is sold worldwide, sailing and marketing led through Houston, Singapore and United States. BHP Billiton headquarters are in Melbourne, Australia. This firm operate a dual listed firm structure with two parent firms, first is BHP Billiton Limited and second is BHP Billiton Plc. The approach of this corporation is to own and operate large, long life, low cost, upstream assets diversified by commodity, market and geography.
This report will demonstrate the current business strategy of BHP Billiton, internal & external analysis of BHP Billiton and its competitive advantage.
As China’s growing retreats from exponential to desirable, with service prices following suit, geology and geography is not sufficient to assurance the on-going growing of Australia. If Australia want to give fresh jobs with great pay scale and some prospects will be beneficial for the youngsters, then they should address the state’s output challenges. There are some reasons, due to which the productivity in Australia has deteriorated in some industry as they are unable to participate efficiently in the world-wide market. A punier Australian dollar gives short-term release which is not sufficient (Alam and Majumdar, 2011). The fundamentals needs to be examined which support productivity, development of talents and the skill of the people of the company – which is the most essential resource of all; the roads, rails and harbour organisation to make the company an effective interchange nation and incentivising and upgrading the skill and innovative ideas to give extra production today and give a provision to the job for tomorrow. The pains are very crucial to increase the output, which will help in organising the capital required to implement new resources and to apply some new technology (Grant et al., 2013). The flow of capital to investment opportunities will be smooth in Australia, if they can be able to make the stability between risks and arrival right. To attract new principal, the most important factor is to make sure that they have a modest taxation command globally – which means they want to have a good tax rate and a proper scheme which is created from the values of simplicity, constancy, transparency, sustainability and fairness (Barbash and Roye, n.d.). A debate which has been informed before, as how to improve the tax system, based on the principles and also needed to have an appreciation of today’s worldwide reality. This discussion should identify the main role of tax locations which it plays, to expand the growth and productivity – and BHP Billiton also want to take part in the discussion. The economy of BHP Billiton make the influence to Australia of around A$27 billion last year by the expenses given to suppliers, earnings and the benefits of the employee, taxes and monarchs, dividends. BHP Billiton is the country’s largest tax payer.
The steel manufacturing industry in Australia has gone through some major failures from the last five years. Industry revenue is likely to fall in an annual rate4 of 8.5% from last five years in 2016-17 to $9.1 billion. This makes an expected decline of 7.9% in the present year. The falling down of demands from the markets going downwards has driven industry failures (Hubbard and Moore, 2012). To be precise, the activity of falling from downstream of mining and manufacturing industries has decreased the demands for the products of the industry. To add in it, low cost of steel and the competition of the import markets has put lots of pressure on the operators of the industry by the help of low cost and decreased demands, with many individuals reducing the production from a long period. The steel industry is relatively capital-intensive (Edwards, 2014). For each and every dollar spent on cost of capital, approximately $3.77 has been spent on wages. The capital strength of differs with the size of the operators of the industry, as more benefits of the firm from the economic scale and more demanding regarding capital, whereas some smaller operators are labour oriented with the high cost of wages in relation to depreciation. In spite of this, high expenses of capital on equipment and machines which is needed to operate in the industry. Capital tool like electric arc furnaces, blast furnaces, charging buckets and machines used for casting are very costly and can be modified to a great extent (Grant et al., 2013). To run the operation, labours with high skill is required to control the machines and the tools of the industry, which makes the expenditure high in the cost of wages.
Figure 1: Australian exchange rates in terms of trade
Source: (Anderson, 2017)
From the above graph, it can clearly be identified that there has been a fall in in the exchange rate in in Australia’s terms of trade. The decline has continued into 2016, as the terms of trade has dipping to 80.5 in the June quarter of 2016, which is the lowest level in the decade.
Figure 2: Business Investment by Industry, June 2006 to June 2016
Source: (Anderson, 2017)
The following data is the real trend data of the business investment in Australia. It can be clearly identified from the above graph that there has been continuation in the falling of the business investment mainly in mining. Business Investment in mining was $54.2 in 205-26, whereas it was $74.8 billion in 2014-15. This clearly indicates a drop of 29.9 per cent(Anderson, 2017). The future business investment and its impact on the domestic economy is still a concern for Australia.
As per the Trading Economics global macro models and analysts expectation the production of steel in Australia is expected to be 450.59 thousand tonnes within the end of this quarter. Looking towards the future, it has been estimated that the production of steel in Australia will stand at 453.63 with 12 months times. It has been analysed that the production of steel in Australia is estimated to trend about 453.69 thousand tonnes in the year 2020 as per the econometric models.
The policy of this business is to own and run large, long life, low cost, upstream properties spread by commodity, market and geography. This firm have an easy and diverse portfolio of tier one assets about the world, with low cost options for future development and creating new values (Grant et al., 2013). This applies values and culture, emphasise security and productivity, deploy technology and exert capital discipline for extracting the most value and the maximum returns from the assets. Its effective model allows leveraging expertise across its business, with multifunctional terms expertise across the group for sharing best practice, make harmless and focus on solving problems together. Its producers are over the world top producer of major commodities involving iron ore, metallurgical coal and cooper. This company also have substantial interests in production on oil, energy coal and gas.
Consistent with company strategy, it has a plan to develop the value of BHP. This plan is focused on six important parts:
The aim of company capital allocation framework is to maximise the potential value of every dollar earn for company shareholder.
Strength: BHP Billiton is one of the largest resources companies. This firm supplies many capitals including copper, uranium, lead and silver etc. it also crops Iron ore, metallurgical coal and manganese in Australia, South Africa and Brazil. This corporation provides thermal coal which is very useful and it is used in the electric power generation and general industry anxieties. This company has shown strong financial returns to its stakeholders (Grant et al., 2013). The profitability ratios show a strong hold on the market. BHP Billiton operates crossways eight countries in Australia, South Africa, the USA and South America. So it has increased the global image of the nation. In case of market capitalization, it is the largest company. This increases the trust of its investors towards the firm. This firm is involved in many CSR activities which has increased the image of the company. These are the strengths of the company.
Weakness: The firm is facing many restrictions by the rule of the land. These rules and regulations include increasing traffic organisation standards and to suspend all the work which is non- essential outside sunshine hours. These have compact the efficiency of many events (Anon, 2017). Communication system of the company is one of the main faintness of the company. One of the ways for growing is to collaborate.
Opportunities: So there are many opportunities for Bill Billiton to raise in size by unions and attainments. This company may obtain related small firms. This company increase a competitive control in terms of social and also in non-human capitals. The monetary condition of the company and general reliability may be broken for expanding the current operations. It may co-operate with the local competitors there for growing. This will increase the image of the firm in many nations. In this modest world, it is essential to continuously discover in order to endure (Bhp.com, 2017). So proper marketing through effective channels is very necessary for growing in this company.
Threats: The BHP Billiton is fronting rivalry from many administrations like Anglo American plc, ExxonMobil Corporation, and Nippon Corporation etc. This may be the major threat in the upcoming centuries. The cost of the raw supplies which is used by the firm is growing at a very fast rate. This will increase the production cost which results to increase the general success.
The PESTEL analysis of Bill Billiton is strategic tool for analysing the macro environment. PESTEL analysis stands for radical, Economic, Social, Technological, Ecological and lawful factors which impact the instruction environment of Bill Billiton.
Political factors play an important role to determine the factors which may impact the long term profitability of BHP Billiton in a country or in market (Bhp.com, 2017). This company is operating in industrial metals and minerals in many countries. BHP Billiton analyse some factors before exploiting in a market.
The factors of macro environment like inflation rates, saving rates, interest rate, and foreign exchange rates regulate the demand and asset in an economy (Anon, 2016). Macro atmosphere factors like struggle norms which effect the competitive advantage of the company. Some economic factors which BHP Billiton should analyse are:
The culture of the society also impacts the nation of a group in an environment. Arrogances of the population play an important role in how the dealers of BHP Billiton will understand the consumers of the market (Anon, 2016). Social factors which BHP Billiton should analyse are:
Technology is growing very fast across the world. Over the last five years the company has been growing very fast (Anon, 2016). Skill analysis includes understanding of many effects-
As different marks consist different environmental standards that can impact the profitability of a company (Anon, 2010). Some of the ecological factors which a company should reflect are:
Some of the legal factors which BHP Billiton leadership should analyse
Conclusion
It has been found from the discussion that BHP Billiton is one of the greatest leading resources Company. This company extract and process minerals, oil and gas, and more than 60,000 workers and contractors works in Australia and America. The flow of capital to investment opportunities will be smooth in Australia, if they can be able to make the balance between risks and return right. As per the Trading Economics global macro models and analysts expectation the production of steel in Australia is expected to be 450.59 thousand tonnes within the end of this quarter. This firm have an easy and diverse portfolio of tier one assets about the world, with low cost options for future development and creating new values. This company provides thermal coal which is very useful and it is used in the electric power group and general manufacturing anxieties.
References
Alam, Q. and Majumdar, N. (2011). Cases in business and management. Prahran, Vic.: Tilde University Press.
Anderson, K., 2017. Sectoral Trends and Shocks in Australia’s Economic Growth. Australian Economic History Review, 57(1), pp.2-21.
Anon, (2010). Our strategy delivers Sustainability Report. [online] Available at: https://static.globalreporting.org/report-pdfs/2010/d15f1e51b615717103b0c49f0818acad.pdf [Accessed 18 Sep. 2017].
Anon(2017). Value through perfromance. [online] Available at: https://www.bhp.com/~/media/bhp/documents/investors/annual-reports/bhpbillitonannualreport2014.pdf [Accessed 18 Sep. 2017].
Anon, (2016). Integrity Resilience Growth Annual Report. [online] Available at: https://www.bhp.com/-/media/bhp/documents/investors/annual-reports/2016/bhpbillitonannualreport2016_interactive.pdf [Accessed 18 Sep. 2017].
Barbash, B. and Roye, P. (n.d.). Investment Management Institute, 2017.
Bhp.com. (2017). Cite a Website – Cite This For Me. [online] Available at: https://www.bhp.com/-/media/bhp/documents/investors/annual-reports/2015/bhpbillitonstrategicreport2015.pdf?la=en [Accessed 18 Sep. 2017].
Edwards, A. (2014). Mineral resource and ore reserve estimation. Carlton, Vic.: Australasian Institute of Mining and Metallurgy.
Grant, R., Butler, B., Orr, S. and Murray, P. (2013). CONTEMPORARY STRATEGIC MANAGEMENT AN AUSTRALASIAN PERSPECTIVE 2E. Melbourne: Wiley.
Hubbard, T. and Moore, M. (2012). BHP Billiton. Evanston, IL: Kellogg School of Management.
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