Will BHP’s likely takeover of WMC be good for Australia, not to mention the shareholders?

“Financial
discipline is the name of the game at BHP these days. Exploration is
outsourced to juniors which can carry out drilling more efficiently.
Buybacks and dividends are just as important as resources and
reserves.” This is the summary of the modern BHP offered by James
Chessell in the weekend SMH. There is no doubting the focus on
matters financial — CEO Chip Goodyear is (quoting Chessell again):
“… a stickler for numbers and detail.”

Outsourcing
to juniors? This is not so sure. In Australia BHPB and Rio have in the
last few years left mineral exploration to Australian mining companies
and juniors. WMC resources has been the helper behind the scenes. They
started in the West and have been the major driving force with minerals
exploration.

Another
big question is whether the takeover is reliant for its success on a
commodity “super cycle” like that immediately after the second world
war. And then there is the question of whether uranium is going to rise
greatly in price as the world switches from carbon-based fuels to
alleviate global warming. This could make the current bid price cheap
indeed.

http://www.henrythornton.com/article.asp?article_id=3164