World’s biggest miner BHP posts soaring half-year profit

SYDNEY: Mining giant BHP Billiton reported yesterday 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$3.2 billion and earnings before tax of US$9.9 billion 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 percent surge in the price of the commodity, compared to the corresponding period in 2015. The latest results show a 157 percent 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$6.39 billion, 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 longterm 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 $40 per ton in 2015 to around $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. —AFP