egolinews.com

BHP Billiton Limited (BHP) believes it can finalise the Western Australia iron ore production joint venture with Rio Tinto Limited (RIO) this calendar year. As part of its commitment to increasing its capital expenditure to around $20 billion next year, BHP plans to spend $5.8 billion on the equalisation payment for the JV.

In his final letter to shareholders before he retires chairman, Don Argus, said the company remains cautious about the state of the global economy and noted the recent International Monetary Fund report, which predicted the output from advanced economies between 2007 and 2011 would grow by 1.9%, while the developing companies would be 22.1%.

”We are very mindful that most countries have difficult decisions to make regarding a wind back of stimulus packages, against the backdrop of financial services sector reform, and how they boost economic growth,” Mr Argus said.

“Governments play a key role in spurring productivity, encouraging investment and fostering international competitiveness.”

He added that policies which reduce free cash flow from profits generated after tax could affect a company’s capacity to pay future dividends.

Jac Nasser is set to takeover as chairman of BHP on 30 March this year. Mr Argus has been a member of BHP’s boards for 13 years, with the last 10 years as chairman.

At the close of trade yesterday, BHP shares were trading at $43.30.