Last November a dam at Samarco iron mine, a BHP joint venture, collapsed killing 19 people ©Press Association Images
Last November a dam at Samarco iron mine, a BHP joint venture, collapsed killing 19 people ©Press Association Images

World's largest miner announces $6.4bn loss

18 August 2016

BHP Billiton, the world’s largest mining company, has recorded an overall loss of $6.4bn following a "difficult" year.

Weak commodity prices led operating proftis to fall 44% to $12.3bn and underlying profits to fall 81% to $1.2bn, the company’s CEO Andrew Mackenzie said in his investor and analyst teleconference.

As well as low commodity prices, the company’s profits were also stung by a series of exceptional costs, most notably as a result of the Samarco dam collapse in Brazil last November. The incident caused 19 deaths.

BHP owns 50% of Samarco, a joint venture with Brazilian mining company Vale, and has agreed a remediation and reparations framework with the Brazilian government in the range of $1.1bn to $1.3bn.

Mackenzie also cited a $5bn impairment charge reflecting the chainging value of its onshore US petroleum assets, as well as “some ongoing global taxation matters”.

“We are clearly disappointed with this result – really disappointed. However, our EBITDA [earnings before interest, taxes, depreciation and amortisation] has remained healthy at 41%,” said Mackenzie. 

BHP also announced efficiency savings, and said capital and exploration expenditure had declined by 42% and was expected to fall further next year.

Mackenzie said BHP was in a good position for the year ahead and had a “near ideal portfolio” of commodities.

BHP’s shares went up 0.7% in London and 3.3% in Sidney after the company announced its results.

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