Melbourne-based BHP Billiton Ltd (ASX: BHP, NYSE: BHP) peaked at No. 4 in the Financial Times Global 500 ranking by market capitalization of the world’s biggest publicly traded companies in the fourth quarter of 2010.

It dropped to No. 6 then bounced to No. 5 over the ensuing two quarters due to advances by fellow big boys such as Industrial and Commercial Bank of China Ltd (Hong Kong: 1398, OTC: IDCBF, ADR: IDCBY), known as ICBC, and Petroleo Brasileiro SA (Brazil: PETR4, NYSE: PBR), known as Petrobras, but fell out of the top 10 entirely in the second half of 2011.

As of March 2012 it’s No. 20, with a market capitalization of USD179.5 billion. It remains the biggest, most important miner in the world, with unmatched diversity of resource projects that’s allowed it to turn the burden of operating in a high capital expenditure business into a competitive advantage.

Since the company reported fiscal 2012 first-half (ended Dec. 31, 2011) results on Feb. 8, and followed up with a lukewarm quarterly production update Apr. 18, the share price on BHP’s home Australian Securities Exchange (ASX) has slipped from AUD37.90 to a May 9 close of AUD34.33. The stock is now more than 30 percent below the post-March 2009 high of AUD49.55 it reached Apr. 11, 2011.

On Feb. 8, along with its fiscal 2012 first-half results, BHP confirmed an interim dividend of USD0.55 per share, up 19.5 percent from the USD0.46 per share paid for the corresponding period of fiscal 2011. Since the Jun. 29, 2001, consummation of the merger between Broken Hill Proprietary Company Ltd and the Anglo-Dutch Billiton Plc that resulted in the present entity through Mar. 31, 2012, BHP Billiton has returned 353 percent to long-term shareholders.

It can now be had with a 3 percent yield attached to a compelling long-term growth story.

This growth story–key to supporting long-term dividend sustainability and expansion–is rooted in BHP’s unwavering commitment to a proven strategy of focusing on large, long-life, low-cost, expandable and upstream assets.

On the supply side, there isn’t a company on earth better placed to meet growing global appetites for an array of commodities that includes iron ore, coal, base metals including copper, lead, zinc, silver and uranium and petroleum resources such as oil, natural gas and natural gas liquids.

The major variable, as revealed during the once again tumultuous period since early February, is demand.

On Mar. 20, in fact, BHP inspired headlines that sent chills throughout Australia and around the world when Ian Ashby, president of the group’s iron ore operation, warned that Chinese consumption of this key steel input would drop “to single digits, if it is not already there,” as growth in the Middle Kingdom slows.

The Australian dollar slid on Mr. Ashby’s comment, while shares of his company as well as fellow Australian giant Rio Tinto Ltd (ASX: RIO, NYSE: RIO) and other resource names dove in Australian trading.

At the same time, however, BHP forecast a floor of around USD120 per metric ton for iron ore, according to Mr. Ashby, a significant but not debilitating decline from the then-current USD145 per metric ton price.

Mr. Ashby also noted the company is “full steam ahead” with plans to expand production of the commodity: It will boost production capacity in the iron ore-rich Pilbara region of Western Australia to 220 million metric tons a year by 2014 and 350 million metric tons by 2020 from about 170 million currently.

Motivation for BHP is the inexorable trend toward urbanization sweeping China and other developing Asian economies. By 2030, according to the Population Division of the Dept of Economic and Social Affairs of the United Nations Secretariat, 62 percent of 1.5 billion Chinese will live in big cities, up from 47 percent of 1.4 billion in 2010 and 27 percent of 1.1 billion in 1990. By 2050 urbanization will reach 73 percent.

India, meanwhile, which in 1990 posted an urbanization rate of 25 percent of its 900 million citizens, reached 30 percent of 1.2 billion in 2010. By 2030 it will be 40 percent of 1.5 billion, by 2050 54 percent of 1.6 billion.

A 2009 McKinsey Global Institute study forecast that by 2025 225 Chinese cities will have more than 1 million residents. For comparison’s sake Europe currently has 35 cities of a million or more people.

This has enormous implications for resource consumption. Five billion square meters of road will be paved, and 170 mass-transit systems could be built. Forty billion square meters of floor space will be built by then, in 5 million buildings. And 50,000 of these structures are likely to be skyscrapers.

China is on course to construct the equivalent of 10 New York Cities over the next decade and a half.

This is the transition of emerging economies from investment- to consumption-led growth. Though steel intensity is forecast to peak first as the construction cycle matures, copper use will plateau later in the industrialization cycle.

Energy and food demand will follow economic growth in a more linear fashion; China is already the leading car market in the world, and rising incomes historically translate to consumption more and higher-quality food, marked by rising corn and soybean production and raising of livestock to satisfy new demand for meat.

This latter is why BHP pursued Potash Corp of Saskatchewan (TSX: POT, NYSE: POT) before resistance from Canadian government types helped it see the light of developing its own “greenfield” project that will allow it entry into the burgeoning global fertilizer market.

BHP has committed USD1.2 billion thus far to its 3 billion metric ton potash resource at the Jansen project, with ground-freezing and shaft-sinking programs underway. Management will seek final board approval to commence with the first phase of major development in calendar 2012. Planned capacity as of now is 8 million tons per year, with long-term potential to push production to 16 million tons on an annual basis.

Execution of BHP’s long-term strategy–rooted in the assumption that urbanization in the developing world, including China and India, will support high commodity prices–also depends on the ability to add assets and fund operations with low-cost capital.

On the latter front the news is positive. In February BHP closed a five-tranche, USD5.25 billion (AUD4.9 billion) bond offering issued in order to refinance existing debt. The biggest tranche is a USD1.25 billion five-year issue that priced 77 basis points above comparable US Treasuries; the 1.625 percent bond is due in 2017. A two-year, USD1 billion floating-rate note was priced at 27 basis points above the three-month London interbank offered rate, while a USD1 billion three-year note was priced 62 basis points above Treasuries.

A 10-year, USD1 billion tranche fetched 92 basis points above benchmark, and another 30-year, USD1 billion tranche priced at 102 basis points, or 1.02 percentage points, above comparable US Treasuries.

This was about rolling over debt rather than preparing for any large-scale projects or new acquisitions. The terms reflect the quality of BHP’s assets, which the market believes will generate solid cash flows for the long term. It will also help BHP trim interest costs, which can’t hurt as it pursues a plan to spend USD80 billion over the next half-decade to boost iron ore, coal and copper production.

The USD5.25 billion package was slapped with an A1 rating and a “Stable” outlook by Moody’s Investor Service, while Standard & Poor’s labeled the offering A+.

The USD12 billion all cash acquisition of US shale-focused Petrohawk Energy Corp  in 2011 pushed BHP’s net “gearing” ratio–a measure of debt to assets–to 25 percent, reversing a long-term trend that brought this metric into single digits the last several fiscal years. But this is still well below the company’s pre-2008 leverage, and it’s not high at all for a company of its size and cash-flow-generating ability.

Petrohawk posted a 61 percent increase in oil and natural gas revenue to USD1.78 billion in 2011, as it ramped up production with drilling successes in Louisiana and Texas. It also benefited from higher average realized prices, as more output was made up of oil and natural gas liquids. The recent slump in US gas prices has led BHP to shift its onshore drilling focus to oil.

BHP is on the bargain rack right now because of warped perception of its fiscal 2012 first-half results. At face value the numbers would appear a little disappointing–a 7 percent decline in net profit attributable to shareholders to USD9.9 billion. In the resources boom era the market’s accustomed to ever-soaring profits and dividends and regular share buybacks from the industry heavyweight,  not profit declines, steady dividends and no buybacks.

But underlying EBITDA of USD18.7 billion was up 8 percent over the prior corresponding period. And underlying EBIT of USD15.7 billion was up 6 percent. Net operating cash flow was USD12.3 billion, up 1 percent, and capital and exploration expenditure was USD9.6 billion.

BHP also registered record production for two commodities and six operations, as Western Australia Iron Ore posted an annualized production run rate of 178 metric tons in the December 2011 quarter, New South Wales Energy Coal notched record half-year output.

WAIO, following a record run rate for the nine months ended Mar. 31, 2012, that saw output rise 22 percent over the comparable period, is on track to hit 200 million tons per year during calendar 2013.

The key Escondida copper project should show a substantial rise in production during the current June 2012 quarter and is on a path to post 1.3 million metric tons of output in fiscal 2015. And development drilling at BHP’s non-operated Gulf of Mexico petroleum assets, which are run by BP Plc (London: BP, NYSE: BP), are forecast to deliver an increase in high-margin oil production following a recovery from the drilling moratorium. The Onshore US petroleum business delivered a 35 percent increase in liquids production compared to the December 2011 quarter.

There are challenges, in addition to the murky outlook for global demand, including maintenance work and lower-grade output at Escondida and the impact on production of facility work and weather at Queensland Coal as well as shrinking margins for the nickel, aluminium and manganese alloy product groups. Management remains cautious on the short-term economic outlook for the developed world, Europe in particular, noting that there’s “no simple solution for the structural imbalances and high levels of sovereign indebtedness in the OECD.”

Another issue is the potential for a writedown of the Petrohawk US shale gas assets in light of steep decline in North American natural gas prices.

But the longer term structural drivers of industrialization and urbanization in the developing world remain intact. Although commodities demand will evolve as emerging economies transition from construction- to consumption-based growth, as a uniquely diversified resources company, BHP Billiton is well positioned to profit from this shift.

BHP Billiton is a buy up to USD40 on its home Australian Securities Exchange.

The New York Stock Exchange (NYSE) listing is an American Depositary Receipt (ADR) that represents two ordinary shares traded on the ASX. Buy BHP on the NYSE up to USD80.

BHP’s fiscal year begins Jul. 1 and ends Jun. 30. The company reports full financial and operating results twice a year; it typically posts first-half results in early February, with full fiscal year numbers out in late August.

Interim dividends are usually declared in September and confirmed with first-half results. Final dividends are also declared ahead of reporting of full fiscal year results; last year BHP declared its final dividend of AUD0.55 on Jul. 21, 2011, with shares trading “ex-dividend” as of Sept. 5, 2011, a record date of Sept. 9 and a payable date of Sept. 29.

The interim dividend declared Sept. 21, 2011, in respect of the first half of fiscal 2012, was paid Mar. 22, 2012, to shareholders of record as of Mar. 2. Shares traded “ex-dividend” as of Feb. 27, 2012.

Dividends paid by BHP are “qualified” for US tax purposes. The Australian government withholds 15 percent, based on the US-Australia tax treaty on double taxation. The two countries have not taken the step of eliminating withholding from dividends paid in respect of shares held in a US IRA, as have the US and Canada.

BHP, as all Australian mining companies are required to do, also provides quarterly production reports, typically in October (for its fiscal first quarter), January (fiscal second quarter), April (fiscal third quarter) and July (fiscal fourth quarter).

BHP currently has the backing of 13 “buy” ratings among the Australia-based analysts who cover it, while six say “hold” according to Bloomberg’s standardization brokerage house lingo. All have maintained ratings in the aftermath of BHP’s fiscal 2012 first-half report as well as the company’s March quarter production and development update. The average price target is AUD45.42.