BHP becomes fifth miner to chop dividend

BHP Billiton yesterday became the fifth FTSE 100 miner to cut its dividend as it racked up a £4bn half year loss.

The world’s largest mining firm is the latest to be struck by the drastic fall in metal and oil prices. It followed Antofagasta, Anglo American, Glencore, Fresnillo and Rio Tinto by scrapping its ‘progressive’ dividend policy, which paid out more each year, and slashing its interim dividend by 75pc.

The mining sector has been devastated by the slump in prices and firms have been forced to write down the value of their mines, slash jobs, costs and investment.

Chief executive Andrew Mackenzie said: ‘Slower growth in China and the disruption of opec have resulted in lower prices than expected.’

Lower demand from China – the world’s second-largest economy and the biggest consumer of commodities such as iron ore and aluminium – has led to tumbling prices. Revenues for the six months to the end of December fell 37pc to £11.1bn and profit collapsed 92pc to £292m. The interim dividend has been cut to 16 cents (11p) a share.

Standard & Poor’s recently cut BHP’s credit rating to ‘A’ from ‘A+’ and warned it might downgrade it again. Mackenzie said the company had already ‘responded decisively to the changed conditions’ and said it had sold nearly £5bn of assets and completed the demerger of mining firm South32.

Finance director Peter Beaven said BHP (down 48.1p to 746.9p) had to stop its progressive dividend policy because ‘things have changed’. He added: ‘The world is a lot less certain. The macro picture is uncertain. We didn’t see the depth of the fall in oil prices.’

The oil price has fallen by 70pc since mid- 2014 and BHP last month wrote off more than £5bn in the value of its US shale oil assets. It also announced a management shake-up to streamline and simplify the business.

BHP’s results included an aftertax charge of £608m following a fatal dam disaster in Brazil at its Samarco joint venture with Vale.

The incident killed 17 people and the company is unsure how large the overall pay- outs, costs and fines will eventually be.

Mackenzie added: ‘Discussions on an agreement with the authorities for managing and funding long- term environmental and socio- economic rehabilitation plans are ongoing.’