BHP chief to forgo bonus after miner’s largest ever loss

ANDREW MACKENZIE, chief executive of BHP Billiton, will forgo his bonus this year after the mining company fell to its largest ever loss and suffered a fatal accident at an iron ore mine in Brazil.

The board of BHP Billiton has decided that a bonus payment was not appropriate after the Australian mining giant reported a pre-tax loss of $7.3bn (£5.6bn) for the year to June 30, on the back of a vast impairment in its US shale business.

Meanwhile a dam collapse at its joint venture Samarco – an independent company co-owned by BHP and Brazilian miner Vale – resulted in a flood that killed 19 people. A report released on Monday found that tweaks to the design resulted in water seeping into the infrastructure and “liquefying” the dam’s defences.

It is understood that Mr Mackenzie agreed with the board’s decision, which was first reported by Sky News. The Scottish-born executive’s base salary has been held at $1.7m since he took up the top job in 2013. Last year BHP’s board voted to cut its own pay by between 6pc-10pc as low commodity prices took a bite out of profits.

BHP denied that cutbacks were responsible for lax safety procedures at the Samarco operation, with Dean Dalla Valle, the miner’s chief commercial officer, saying there was “nothing to indicate people were prioritising productivity over safety”. “This was a profitable mine,” he added.

The 10-month investigation, by New York law firm Cleary Gottlieb, did not apportion blame for the dam’s collapse. Mr Dalla Valle said lessons from the report, a technical study compiled by a panel of experts, would be applied to its other dams around the world.

BHP also plans to centralise management of the joint ventures that it does not operate into its Americas division; this includes the Antamina copper mine in Peru and the Cerrejón coal mine in Colombia, as well as Samarco.

Mr Dalla Valle said there was “good local support” for the restart of Samarco, a large employer in the area.

“We’re working through the process… technically it could happen very quickly but there are a number of appeals against that process.”

A settlement between the Brazilian government and Samarco, Vale and BHP designed to pay for the clean-up of the dam collapse has been suspended pending a separate claim lodged by federal prosecutors, who are seeking close to £33bn in compensation.