An investment in commodities is always associated with risks. Commodity prices are subject to considerable fluctuations in some cases and are highly volatile. On the other hand, natural raw materials are only available in limited quantities, but precious and industrial metals in particular, as well as important energy resources such as oil, natural gas or coal, are urgently needed.
While investors can invest directly in the physical commodity for some commodities, such as gold or silver, this is not possible for many other commodities.
Commodity funds or shares of mining companies offer investors the opportunity to participate in these companies and the development of the global commodity markets and, with a little skill, to profit from it. Investing in one or more of the major players on the commodities market is a very safe and often high-yield investment. One of the largest mining groups in the world is the Australian-British mining company BHP Billiton.
Business areas of BHP Billiton
The British-Australian raw materials group BHP Billiton extracts and processes various raw materials, primarily in Australia and in North and South America. The company was founded back in 1885. At that time, BHP operated only lead and silver mines in Australia.
Today, BHP Billiton is one of the leading producers of iron ore and copper. The Group’s business activities also include the mining and processing of crude oil, natural gas, nickel, potash salt and coal used for energy purposes.
The mining and processing of other raw materials, such as silver, manganese and aluminum, was also part of BHP Billiton’s field of activity until 2015. In the meantime, however, these business areas have been outsourced to the independent company South32.
Corporate structure and share
The company is headquartered in Melbourne, Australia. The corporate structure consists of the two umbrella companies BHP Group Limited and BHP Group Plc. However, both umbrella companies have joint corporate management and form a single economic unit.
With a market capitalization of $132, BHP Billiton is one of the world’s largest commodity companies. Experts consider the share of the raw materials group to be relatively safe and high-yielding among raw materials shares due to the fairly high dividend.
Existing claims for damages
In addition to the two umbrella companies BHP Group Limited and BHP Group Plc, various shareholdings are part of the overall Group. Among other things, BHP also holds a 50 percent stake in Samarco Mineraҫão. The Brazilian mining group is primarily engaged in the mining of iron ore in the Brazilian Amazon.
In 2015, there was a consequential dam failure in Mariana that caused a huge environmental disaster due to toxins leaking from iron ore mining and also resulted in several deaths.
The company Samarco Mineraҫão was responsible for the consequences of the accident and to this day there are still claims for damages in the 2-digit billion range, for which BHP Billiton must also answer.