Miners back in black as metal rally lifts profit

COST-CUTTING and a boost to commodities prices are helping miners climb out of one of the industry’s most severe slumps.

BhP Billiton and Anglo American both announced a return to profit, less than two weeks after Rio Tinto doubled its dividend after doing the same.

The industry slumped in 2015 after years of splashing out, amid hopes of demand from China. But it is now re-balancing after many companies cut costs and sold mines.

Matthew Tillett, a UK equities manager at Allianz Global Investors, said: ‘They have kind of seen the light in terms of over-expansion and over-bullishness in the previous era.

‘A bit like the oil companies, they have been through a neardeath experience and they are being cautious about life.’

BhP posted profit of £2.5bn for the half-year ended December 31, compared to a loss of £4.6bn during the same period in the year before. Anglo Amer- ican, meanwhile, swung back to a £1.3bn profit over 2016 compared to a record £4.5bn loss the year before.

earlier this month, Rio Tinto announced £3.8bn profit compared to a £1.3bn loss in 2015.

The companies are benefiting from higher than-expected demand from China for their key products such as iron-ore and copper. Iron ore prices climbed more than 80pc in 2016, setting a 30-month high this week of $92.7 per tonne. however, Anglo’s basket of commodity prices was 3pc lower in 2016 than in 2015. It sold loss-making platinum mines in South Africa as part of a restructuring.

Following the slump in 2015, BhP split itself in two by selling its South32 new metals division, among more than £5.6m of sales. Some of its losses last year included the financial impact of the Samarco dam failing of 2015, which killed 19 people.