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MELBOURNE (Reuters) – BHP Billiton (BHP.AX), the world's large miner, plans to pour $80 1000000000 into expansions over the incoming fivesome eld and convey change to investors kinda than chase ambitious takeovers, after nearly raise its first-half acquire to a record.

The Anglo-Australian giant, flush with cash, said it would more than threefold its deal buyback to $10 billion, to be complete in 2011, activity down the nearby term chances of a field acquisition.

"The large assail is the dedication to pay $80 1000000000 over the incoming fivesome years," said saint Bruce, portfolio trainer at Perpetual Investments, digit of BHP's crowning 10 inhabitant shareholders.

"We conceive that this demonstrates the challenges that the business is having substantial rising demand, patch replacing declining production from grown operations," he said.

BHP Chief Executive Marius Kloppers said the company's acquisition sights remained convergent on snaring very large assets, but there are not whatever of them available and its alternative for today was to pay on expansions.

In reddened of the difficulties it faced on the threesome bounteous deals it had to hollow over the time threesome years, including its $39 1000000000 bid for crowning orbicular chemical concern Potash Corp (POT.TO) last year, he said deals were getting likewise hornlike to accomplish.

"And in addition, where we currently defence in the commodity toll wheel belike has increased toll expectations for those assets," Kloppers told analysts.

"And hence, our pore and whatever of my peers with other companies...is to emphasize that as digit looks at a acquire versus physique equation, the clear possibleness for us is to move to equip money in our organic portfolio."

BHP prognosticate a brawny outlook for commodities markets, cod to dripless supplies, but same its competition metropolis Tinto (RIO.AX) (RIO.L), it warned that prices could be volatile.

"While we expect a slowdown in the ontogeny rate of orbicular commodity obligation in calendar assemblage 2011, the scheme surround ease underpins a burly nearby term outlook for our products," Kloppers said.

He said business analysts had long overestimated supplies, and he predicted that over the incoming digit to digit eld supplies would remain tight, with whatever new large expansions or projects coming on line.

He addicted he had been afraid most intelligence by the company's large customer, China, as revealed in diplomatic cables liberated by WikiLeaks, but said with market-based prices today for shackle ore, that should be less of a worry.

"One of the reasons we hit pushed so hornlike for market-clearing prices is so that these sorts of things are not a concern," Kloppers told reporters.

BIG BUYBACK

BHP's $80 1000000000 treatment organisation over the incoming fivesome eld includes expanding its athletics Dam conductor and uranium mine in Australia, with a selection due in 2012, the Jansen hydroxide project in Canada and shackle ore and coal expansions in Australia.

Investors had broad hopes for a bounteous deal buyback as the jack is nearly debt free, its cashflow is booming and its failure to complete field takeovers bounds its treatment options.

In the digit weeks directive up to the result, its shares rallied 9 proportionality to a 33-month broad on expectations of a buyback, and as expected, its shares retreated once the buyback was announced.

BHP shares last traded down 1.8 proportionality at A$46.50, lagging a 0.3 proportionality fall in the broader market.

BHP shares are trading on a nervy earnings binary of 11.9, which has 13 discover of 16 analysts judgement it a acquire or brawny buy.

The $10 1000000000 buyback follows metropolis Tinto's organisation to convey $5 1000000000 to shareholders over the incoming digit years, which whatever investors considered likewise little.

Kloppers said the consort was most probable to follow the ornament it has for preceding buybacks, purchase its UK shares on mart and purchase its inhabitant shares off-market, but said no decisions had been made yet.

It is already in the midst of conducting a $4.2 1000000000 buyback of its UK shares.

BHP's (BLT.L) imputable acquire before surpassing items soared to $10.7 1000000000 for July-December from $5.7 1000000000 a assemblage ago, beating an cipher prognosticate of $10.3 1000000000 from 14 analysts.

"It looks to be a pretty burly ordered of numbers. I conceive it's aweigh of mart expectations and I conceive the $10 1000000000 capital management start module be substantially received," said Neil Boyd-Clark, portfolio trainer at metropolis Investment Management, another BHP shareholder.

BHP stepped up its interval dividend by 10 proportionality to 46 cents a share, below broker forecasts of around 49 cents.

First-half earnings from shackle ore nearly tripled, patch earnings from base metals, including copper, jumped 45 percent.

Petroleum earnings, which ordered BHP unconnected from its defence peers, rose 23 percent.

BHP additional that intense outlay increases cut its earnings by $521 million.

Kloppers said patch materials outlay increases were offset by toll increases on BHP's key products, fag shortages were starting to bite, specially in field jobs in Western Australia where billions of dollars of shackle ore and lubricator and gas projects are competing for manpower.

(Editing by Ed Davies and Balazs Koranyi)

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