Mining giants BHP Billiton and Rio Tinto are looking to generate up to $20 billion each in free cash flow according to Merril Lynch analysts.

 

In an article published in The Australian, data shows that despite aggressive expansion plans, both mining companies look to report high amounts of cash liquidity.

 

"Rio and BHP are poised to generate significant free cashflow (FCF) over the next three to five years - about $20bn in 2011 earnings alone," Merrill Lynch analyst Peter O'Connor told The Australian.

 

"With continued strong cashflow generation for both companies, we believe the potential exists for additional capital management plans and M&A firepower, even given the aggressive expansionary capex growth."

 

Despite the cost blowout of BHP’s Worsley’s Alumina refinery, the company looks to finish the financial year in a strong position after in inching closer to completing its $US10 billion share buyback

 

"Rio and BHP are poised to generate significant free cashflow (FCF) over the next three to five years - about $20bn in 2011 earnings alone," he said. "With continued strong cashflow generation for both companies, we believe the potential exists for additional capital management plans and M&A firepower, even given the aggressive expansionary capex growth,” Mr O’Connor concluded.