I think the world’s biggest mining corporation (that’s BHP Billiton) is in big trouble this year, although it may not surface until next. At the very least, it is a huge gamble.
BHP is banking on a big turnaround in the price of oil to something like $50 dollars a barrel over the next year and is looking to buy up cheap oil assets from the expected crowd of bankrupt oil companies over the same period.
Ahem… Shouldn’t somebody be asking, “What sort of investment strategy is that?”
Not very clear forward thinking, to my mind. I would have thought a more positive approach would have been to diversify out of mining, myself. There’s not much future to that line of work. They only have to look at their 86% first half profit downturn from $5.4 billion last year to $751 million this year. The mining industry is on its last legs. Not just temporarily, but for good.
And that hoped for $50 per barrel oil price? Sheeesh! Even at that lofty price (it was $120 or more per barrel 2 years ago) is not commensurate with trading at a profit. You only have to remember back a few months, maybe six or so, when oil was fetching more than $50, and still, even back then, that’s when oil companies were in deep trouble and paddling like crazy to stay afloat, selling assets and buying their own shares just to maintain the illusion that all was well.
WHAT IS BHP THINKING? The World’s Biggest Miner May Be About to Toast Its Oil Drillers Toast its oil drillers? The whole organisation is going to be toast.
Nothing good is going to come of this. Thank goodness. But why am I concerned? Well, actually I am not concerned, in the slightest. I just allot some time most days looking for evidence that the world economy is sinking into the mire. I don’t usually have to look very far to find it.
The cracks are beginning to grow wider in our crumbling global economy on a daily basis.
Those who should be, those so-called Captains of Industry, are no longer thinking straight. Hence the raising of ideas like this ludicrous strategy of BHP. Isn’t the pursuit of such activity as that, known as ‘panic’?
Icons like BHP will fail and fall just as quickly as many lesser-known entities. The sooner the better, for the world’s sake.