UPDATE: Boart Sees Strong Demand, Downplays BHP Concern
May 17 2012 - 1:22AM
Dow Jones News
Demand for mining services remains robust in spite of the
uncertain global economic outlook, the chief executive of Boart
Longyear (BLY.AU) said Thursday.
Craig Kipp said there was no sign of waning demand for mining
services such as drilling, as the company reiterated its full-year
guidance.
His remarks are in sharp contrast with those of BHP Billiton
Ltd. (BHP, BHP.AU), whose Chairman, Jacques Nasser, said Wednesday
that a lack of certainty over the economic outlook may force it to
back away from an ambitious $80 billion five-year capital-spending
plan.
Kipp downplayed Nasser's cautious comments, saying that while
he'd seen softer demand from smaller juniors--some of which have
had problems with financing in the current climate--exploration
spending among the world's largest mining companies hasn't
weakened.
"We've not seen any change in the market dynamics," Kipp told
reporters at a press conference in Sydney on Thursday. "We still
see very strong demand, particularly from the majors."
Boart Longyear is a key provider of mineral exploration drilling
services and drilling products to mining companies. It has a market
value of 1.44 billion Australian dollars (US$1.43 billion).
Nasser Wednesday said BHP management has been rethinking its
capital-expenditure plans "every day" as the global economic
climate has rattled markets and uncertainty within the Australian
mining sector clouded its outlook.
But Kipp's observations paint a different picture.
"We haven't heard from a lot of the majors outside of Australia
that there is a change in their plans, budgets, or that there is a
massive realignment of their expectations," he said. "We just
haven't heard that."
Kipp suggested that Nasser's remarks, at an Australian business
lunch, may have been just "a bit for local consumption". He
wouldn't say if he thought the comments were politically
motivated.
While the uncertain economic environment had forced Boart to
contain its fixed costs, he said management felt comfortable that
the company would be able to meet its full-year targets. Boart
expects to lift earnings before interest, tax, depreciation and
amortization by 29% to $460 million in 2012, the company said.
-By Rhiannon Hoyle, Dow Jones Newswires; 61-2-8272-4625;
rhiannon.hoyle@dowjones.com
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