Sheets of copper cathode are pictured at BHP Billiton's Escondida, the world's biggest copper mine, in Antofagasta, Chile March 31, 2008. Picture taken March 31, 2008. REUTERS/Ivan Alvarado
SYDNEY: Mining giant BHP Billiton reported Tuesday a dramatic rebound in half-yearly profits on the back of surging coal and iron ore prices and improved productivity.
The underlying profit of US$3.2bil (RM14.3bil) and earnings before tax of US$9.9bil (RM44.1bil) for the last six months of 2016 exceeded expectations.
”This is a strong result that follows several years of a considered and deliberate approach to improve productivity and redesign our portfolio and operating model,” chief executive Andrew Mackenzie said.
The Anglo-Australian mining giant announced a 40 cent interim dividend per share which eclipsed analyst projections of about 30 cents.
In January the company reported record Australian iron ore production in the last six months of 2016 after a 28% surge in the price of the commodity, compared to the corresponding period in 2015.
The latest results show a 157% increase in underlying profit from a year ago and a 65 percent year-on-year jump in earnings before tax, marking a significant turnaround in the company’s fortunes.
BHP posted an annual net loss of US$6.39bil (RM28.5bil), its worst ever result, for the year to June 30 2016 as the industry battled big declines in commodity prices.
For copper, BHP said it would revise output guidance at Chile’s Escondida mine, the biggest in the world, where 2,500 workers are on strike.
”We are confident in the long-term outlook for our commodities, particularly oil, with markets expected to rebalance in the near-term, and copper where we expect a deficit to emerge in the early 2020s,” Mackenzie said.
However the firm added in a statement that “the (iron ore) market is likely to come under pressure in the short term from moderating Chinese steel demand growth, high port inventories and incremental low cost supply”.
Iron ore prices have risen from a low of US$40 per tonne in 2015 to around US$90 this month.
Metallurgical coal prices also surged in the last six months “driven by pronounced shortages in both domestic Chinese and seaborne supply”, BHP said.
The profit rebound comes amid ongoing settlement negotiations over the November 2015 fatal Samarco mine collapse in Brazil.
Samarco -- which is co-owned by BHP and Vale -- is facing massive legal costs for the tragedy, in which 19 people died, an entire village was destroyed and water and supplies were cut off to tens of thousands.
BHP said last month they had struck an agreement with Brazilian prosecutors to negotiate settlement of a 155 billion real (US$50bil) claim by June 30.
”Restart of (Samarco) operations remains a focus but will only occur if it is safe, economically viable and has community support,” BHP said in its results.
The world’s second-largest miner, Rio Tinto, also reported a surge in gains earlier this month. Annual net profit hit US$4.62bil for the year to Dec 31, compared to a US$866mil net loss in the previous financial year. - AFP
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