Share of the week : BHP Billiton

BHP Billiton, the world's largest diversified commodity miner, said this week it was on target to maintain production levels in Australia despite bad weather and issues with its labour unions.

The miner's shares, listed on the JSE and in Australia, have fallen in tandem with commodity prices over the past quarter.

Union workers at BHP Billiton and Mitsubishi coal mines in Australia are expected to increase industrial action that would cause production disruptions.

Steve Smyth, Queensland president of the Construction Forestry Mining and Energy Union, said 12 -hour work stoppages that started last Friday would continue this weekend at each of the six metallurgical coal mines operated jointly by BHP Billiton and Mitsubishi in the Bowen Basin coal fields.

"BHP Billiton is such a large company that a lot can go wrong and their production will not suffer," said Peter Major of Cadiz. "Inversely, when commodity prices go up, it is also difficult for them to raise production."

Australia's Agricultural and Resource Economics and Sciences agency predicted mineral exports would soar next year after a tough 2010/11that saw production dipping as a result of floods. The federal government's official commodity forecasting agency said export earnings for Australia should soar by 20% in 2011/12, with both mining and farm commodity exports rising strongly.

"Forecast increases in export prices and shipments for Australian iron ore and metallurgical coal are the main reasons for the expected increase," said the agency's acting deputy executive director, Kim Ritman.

On Tuesday, the Wall Street Journal reported that West Australia's premier, Colin Barnett, had reaffirmed his opposition to a BHP Billiton takeover of Woodside Petroleum.

This came after the Australian media reported a persistent rumour that BHP Billiton may be preparing to launch a $35-billion takeover bid for Woodside Petroleum after shares in the Perth-based explorer closed below $40 for the first time in 10 months.

BHP Billiton's share price traded at R250.30 on Wednesday on the JSE, down from its 52-week high reached in February 2011, when commodity prices rose dramatically owing to geo-political concerns. The subsequent pullback in commodity prices has also been reflected in the share's lacklustre performance over past months.