bhp and rio

global driller dispells what has been said by bhp and rio recently regarding projects going slow ahead or not going ahead as nothing more than a local issue (politics).

TICKY FULLERTON, PRESENTER: Yesterday, BHP Billiton chairman Jac Nasser delivered disturbing news that he was shelving a planned $80 billion spending on growth projects.

But in sharp contrast today, the world's biggest drilling services and products company for the mining sector, Boart Longyear, confirmed its guidance of a 14 per cent growing to record revenues for this year.

Confused? We were. Global CEO Craig Kipp was in Sydney today.

Craig Kipp, welcome to the program.

CRAIG KIPP, CEO, DHL GLOBAL MAIL: Nice to be here, Ticky.

TICKY FULLERTON: Well your shares have done a roaring trade today. I assume on the back of your investor briefing and your confirmation of profit guidance.

CRAIG KIPP: Well, yes, I hope so. We had our AGM on Tuesday. We confirmed guidance on Tuesday. We invited all our investors in to see some of our management, go through our products and services and hopefully all that's paying off today.

TICKY FULLERTON: I'm just curious because in the fortnight running up to your AGM your shares were off about 20 per cent, reportedly reflecting an outlook for growth. And I'm trying to weigh that up with your comments that you've made today which are much more positive.

CRAIG KIPP: Yes, we've been positive all year, actually. And I know there's been negative comments coming out of ...

TICKY FULLERTON: From Mr Jac Nasser no less.

CRAIG KIPP: Yes, right from the top, which I think we've - it's impacted our stock along with others. We haven't seen anything like what he's talking about. We haven't seen other mining companies talk about reducing their programs, our capital expenditure.

TICKY FULLERTON: This is even within Australia, because he's largely talking about Australia, isn't he?

CRAIG KIPP: Well, I don't know and that to me is kind of a mystery. We don't know whether he - I don't know whether he was talking about Australia particularly or his entire global business. We do work for BHP all over the world. They're a very important customer of ours.

But what I think on this really isn't important. Our investors obviously took some of that news very negatively. I think it impacted the stock over last few days. I'm very pleased to see it recover.

I mean, the short answer is: we're drilling all over the world, 20 per cent of our revenues come from Australia, 80 per cent comes from the rest of the world, including Africa, Latin America, Canada.

TICKY FULLERTON: But those places, Latin America and Africa and Australia are your areas of expansion that you've talked about.

CRAIG KIPP: It is. We're expanding in those areas. But I just want to finish that thought. We don't see this thing slowing down. We don't see a big drawback. We haven't pulled any rigs off of any sites. We haven't lost any customers.

TICKY FULLERTON: It's hard to reconcile the two because both Rio Tinto and BHP in the last month have deliberately fed the print media with big go slow, reductions of capex, and I'm just wondering: I mean, are these crocodile tears, do you think? Is this a political thing?

CRAIG KIPP: Ah, I don't know. And the last thing ...

TICKY FULLERTON: You made the comment today that Jacques Nasser's comments might have been for national consumption.

CRAIG KIPP: I think the words were "it may have been for local media".

TICKY FULLERTON: I mean, we all know these companies, two big guys, have had real problems over the mining tax here in Australia.

CRAIG KIPP: Yes. Look, I'm in the US. Following that political environment is difficult enough. I'm not going to comment on what's going on in Australia. And I'm certainly no expert.

But I think this is the world we live in. I think this variability that we're talking about - one day I'm getting requests from investors and analysts, "Can I handle the demand? Do you have enough capacity to handle the demand?" The next day they're wondering if Greece and Europe and the US debt situation are going to crater the business. Are we going to go into another global financial crisis?

I think this variability's going to be here for a long time. I think it's an environment that CEOs and executive teams are going to have to learn to live in and operate in and to run their businesses in. Because it's not going to end this month. I don't think it's going to end next year. I think it's kind of a new dimension to doing business globally.

TICKY FULLERTON: I was interested to see that over 40 per cent of your revenues are gold related, actually. Iron is actually - iron ore's only about eight per cent, I think.

CRAIG KIPP: That's right.

TICKY FULLERTON: But, again, we've got the gold price coming off quite significantly as well. But that's no impact either, really?

CRAIG KIPP: Well, in this industry, in the drilling services business, if you will, gold is always - almost every company is 30 to 40 per cent of their revenue is gold. Gold is always something people are looking for. So we're not unusual. It is a large part of the revenue that we get.

Iron for us, your numbers are pretty close, we're usually 8, 9, 10 per cent, which is large for a drilling company. Most of that is Australia. We have a lot in Brazil as well.

And then of course copper is kind of number two and that's Chile, Peru is big in the copper market and, frankly, the US, Arizona is big.

So, good diversity of commodities and if you'd have talked to us five years ago, iron wouldn't even have been on the screen. I mean, it wasn't a part of Boart Longyear's mix. That's how important I think WA has come to us. And of course it says a lot about what's happening in China because most of that iron is heading to China.

TICKY FULLERTON: And China's growth is coming off; still no problem?

CRAIG KIPP: I don't worry about China. I actually do not worry about China. I lived in China for a number of years. China is going to be able to take care of itself. And whether you're talking 8 per cent or 8.5 per cent or 7 per cent, I'll be honest with you, this is a country that saves, the people over there have a high savings rate, they don't have any debt problems.

This is a country that I think you have to look at five, 10, 15, 20 years from now and I think they're going to do fine. What happens every week or every month in China to me is almost immaterial to my business because I - this is a country that's going to do very well.

TICKY FULLERTON: Craig Kipp, thank you very much for joining us.

CRAIG KIPP: Yep. It was a pleasure. Thank you, Ticky.