BHP uncovers possible violations of anti-graft laws
SYDNEY (Reuters) - Global miner BHP Billiton revealed on Wednesday possible violations of anti-graft laws inside the company, in another blow to the mining industry's tarnished image.
BHP Billiton said it had found the possible violations, relating to old exploration projects, and was now cooperating with the U.S. Securities and Exchange Commission (SEC) and carrying out its own internal probe.
It said the exploration projects in question had been terminated before December 2008 and were "relatively small," but it declined to give details of the possible violations.
The announcement comes soon after staff from main rival Rio Tinto were jailed for bribery in China in a case that shed an ugly light on the mining industry, which once again is in the grip of a commodities boom fueled by Chinese demand.
BHP Billiton revealed the investigation in a single paragraph in its third-quarter exploration report and said in a separate email that the probe did not relate to activities in China.
"The company has disclosed to relevant authorities evidence that it has uncovered regarding possible violations of applicable anti-corruption laws involving interactions with government officials," it said in its exploration report.
"The company is cooperating with the relevant authorities, including conducting an internal investigation, which is continuing. It is not possible at this time to predict the scope or duration of the investigation or its likely outcome."
It said it could not make much further comment on the matter.
But it added: "We can confirm that the SEC's requests for information primarily relate to certain terminated minerals exploration projects and not any activity in China, BHP Billiton's marketing activities or the sale of any of the company's products."
'THE LAST THING BHP NEEDS'
Mining analysts and fund managers said they had not had time to consider the ramifications of the investigations but that it would cause uncertainty among investors at a time when BHP Billiton needed regulators on its side.
"Given the lack of detail (on the probe), the market may choose to sell first, ask questions later," said Ben Potter, market strategist at IG Markets.
BHP Billiton is counting on world regulators, especially in the European Union, to approve its proposed $116 billion iron ore joint venture with Rio Tinto in Australia.
BHP Billiton and Rio Tinto are the third and second largest producers of iron ore, respectively, and operate mainly out of Australia's rich Pilbara iron ore region. Their proposed venture is hotly opposed by steelmakers who claim the pair would be able to exert undue influence on prices for iron ore.
"Given they have got enough on the agenda in terms of dealing with regulators over the Pilbara joint venture, this is probably the last thing they need at this point in time," said Tim Schroeders, fund manager with Pengana Capital.
WEAK PRODUCTION DATA
In its production report also released on Wednesday, BHP Billiton posted an 11 percent rise in third-quarter iron ore production, trailing a faster expansion in iron ore output at Rio Tinto which reported 39 percent growth for the March quarter.
BHP Billiton also reported a heavy fall in copper output, which was down 19 percent in the March quarter from a year earlier, partly due to disruptions at its Olympic Dam mine.
Production from Olympic Dam, the world's fourth largest copper deposit, was cut by 75 percent in October due to a mining accident that shut the main shaft. The shaft is being repaired and is due to return to normal operation by end-June.
(Reporting by James Regan; Editing by Mark Bendeich and Balazs Koranyi)