Why BHP Billiton’s Share Price Climbed 2.56% Today

Multinational mining giant, BHP Billiton Limited [ASX:BHP], has continued its upward trend in the markets today, climbing 2.56% at time of writing.

BHP is the largest mining company in the world and the third largest company listed on the ASX. Their market cap currently sits at $157.6 billion.

South32

BHP’s rising share price may be related to the recent developments in their spinoff company, South32. At its inception in 2015, South32 was a receptacle for all of BHP’s lesser performing projects and ventures.

South32 continues to struggle with controversy.

The latest example, as reported by The Australian Financial Review, is Colombian nickel mine Cerro Matoso. The Colombian constitutional court has ordered South32 to pay damages to the local indigenous and Afro-Colombian communities. Despite being in operation for 30 years, the long-term negative health effects from the mine’s harmful waste are only now coming to light. The reported health problems range from elevated levels of nickel found in the blood and urine of locals, to respiratory diseases including lung cancer.

South32’s chief executive, Graham Kerr, has recognised the Cerro Matoso mine is yet another time bomb that has been ticking since the mine was handed over from BHP.

The more of South32’s problems that come to light, the more investors may view BHP as having gotten an excellent deal when it stepped away from these assets.

Another legal battle

Despite the climb in the markets over the last week, BHP is still dealing with the repercussions from other projects that they couldn’t hand off to South32. Their Ok Tedi copper mine in Papua New Guinea’s Western Province in the 1990s is one example.

In 2004, BHP faced a massive lawsuit representing thousands of PNG landowners regarding the widespread harm caused to tens of thousands of citizens and the environment at large, by the annual dumping of the mine’s waste into the local Ok Tedi river system. That lawsuit was settled and compensation was paid by BHP. However, it seems BHP isn’t off the hook yet.

Despite this, the market seems to view BHP’s prospects in a good light. Today’s 2%-plus rise was significant for a company of BHP’s massive size.

Regards,

Julija Zivanovic,
For Markets & Money

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