BHP Calms Olympic Dam Speculators
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Despite the many concerns that were raised surrounding the issue, it seems that the BHP Billiton (NYSE: BHP) Olympic dam will not be delayed after all.
BHP is trying to calm the concerns of many that work on its Olympic dam following reports that the company would back away from $80 billion worth of projects. This caused some concern regarding whether or not the company would reach a decision on the dam, but it maintains that it will give the final word later this year and that it remains dedicated to the dam project.
Let's consider some of the reasons why people believe that the board may not approve spending on the Olympic dam expansion and then look at why there is nothing to worry about. The news that the company is going to cut back on spending $80 billion does not imply that it will stop spending altogether. The Olympic dam project could still be on the "to do" list. Second, in a statement made by the company it was said that due to the slowdown in the demand for commodities in China, no new projects would be approved for 6 months. However, it is important to note that this refers primarily to iron demand, not copper. This should not affect the Olympic dam area as it mines copper. Third, people are worried that the iron and coal tax will seriously affect the company's profits. This is true for areas such as Queensland, but it does not affect Olympic dam's copper, gold, uranium and silver.
Several issues and concerns have risen since the dam expansion project was announced. One problem is that of the increased office space that will be required to accommodate all involved in the project. Obviously no final decision will be made here until the board has given the go ahead for the actual Olympic dam project, but the financial strain of finding or building the vast amounts of additional office space that will be needed is substantial. This represents the impact that the new project will have on the economy of the area where it is being built. The fact that additional office space is needed implies that a large number of additional jobs will be created in the process of this project. This is something that will benefit the economy and not just the company. As one source puts it, "the project will define their future." There are a number of negative aspects to the Olympic Dam project. However, there are also a number of positive aspects. The question lies in which side of the fence the board will come down on.
Competitor Goldcorp (NYSE: GG) knows how to keep ahead of the game and avoid bad press in the process. This mining company has successfully managed to keep its status as one of the world's fastest growing senior gold producers. Recently, it announced its sixth month dividend payment for 2012 at $0.045 per share which will soon be payable to shareholders on record at the time that business closes on the 14th of this month. As mining stocks go, Goldcorp is one of the few that is consistently able to deliver to its shareholders what they deserve.
Even though shares in Silver Wheaton (NYSE: SLW) have declined of late, I still believe this mining stock to be a good one to bet on. The company is likely to grow significantly in the future as it is, at present, well positioned to add to its portfolio. The fact that many analysts are still bullish about the metal streaming company tells me that this is the mining stock to watch out for. Investors looking for a way into this industry should consider Silver Wheaton as their ticket as, at this point in time, the company's future prospects are looking good.
Competitor Vale (NYSE: VALE) is facing the backlash of an event that occurred one year ago in which two of its miners, Jordan Fram and Jason Chenier, were killed. The union for the miners claims that the company was negligent and that the deaths could have been easily avoided. At this point the company has been charged under the Occupational Health and Safety Act, but criminal charges are still possible. Regardless of the outcome of the court case that will begin in a few months, this is the kind of bad press that can have a very negative effect on a stock.
Another competitor, Rio Tinto (NYSE: RIO) recently launched a campaign called "Diamonds with a Story" in order to promote its diamond business. The new marketing strategy is based on the fact that about 75% of people actually care about the back story behind a diamond and want to know what it is that makes that diamond special. This will serve as an important point of differentiation for the company's diamond business and, as this business is present in five continents, the effect on Rio Tinto's revenue and therefore the stock as a whole will be impressive.
With good signs coming from the Olympic Dam project's future, BHP Billiton appears ready to rise.
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