As the equities markets continue to suffer, my choices for the most sensible places to invest your hard-earned shekels include the global resources companies, including Brazil's Vale (NYSE: RIO), London-based Rio Tinto (NYSE: RTP), and Australia's mining behemoth BHP Billiton (NYSE: BHP). BHP helped confirm my logic this week by announcing that it had boosted its attributable profit delivered for the seventh straight fiscal year.
In discussing its accomplishments, BHP noted that the world is facing supply constraints for energy and mineral resources, both of which it produces in abundance. At the same time, it claimed that the success of its exploration efforts is apparent in its increases in iron ore and manganese resources and reserves. The company also pointed to a new copper prospect at Pampa Escondida in Chile.
Examining the future prospects for its wide range of minerals and energy, the company observed that, despite economic softness in many developed nations, emerging economies' demand for raw materials is undiminished. In particular, "China remains a key driver of global commodity consumption through its position as a net importer of raw materials."
But perhaps the current key for BHP involves its now-longstanding effort to acquire Rio Tinto. Thus far, the smaller company has spurned BHP's advances, and regulators haven't yet signed off on the deal. On Monday, BHP CEO Marius Kloppers admitted that there are "significant hurdles" in his company's bid for Rio.
Developed and developing economies are watching the BHP-Rio mating dance closely, in large part because of the companies' combined effect on the global iron ore and other resources markets. Earlier this year, in an effort to insinuate themselves into the potential combination, Aluminum Corp. of China (NYSE: ACH) and Pittsburgh-based Alcoa (NYSE: AA) teamed up for a stake in Rio Tinto.
So while the company's assessment of ongoing demand for its products is encouraging and important, are eyes are also fixed on BHP's lengthening chase for its British rival. More than 97% of Motley Fool CAPS players have checked in with bullish opinions on five-star BHP. Why not tell us what you think?
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