BHP’s profit decimated by writedowns

Mining giant BHP has taken a $8.56 billion hit to its half-year profit after writing down its West Australia nickel operations and making adjustments for its Samarco mine in Brazil.

Australia’s largest miner said the writedown at its Nickel West, West Musgrave and Samarco operations offset had undermined what was an otherwise solid operational performance and overall healthy commodity prices.

BHP’s underlying profit was $US6.6 billion ($10.1 billion), but after writing off $US5.6 billion at its Australian nickel operations, the result of the global crash in nickel prices, it announced its half-year profit was down 86 per cent to $US972 million ($1.41 billion).

The company said volatility in global commodity prices and demand for its ores in the developed world was softer than expected. It will pay an interim dividend of $1.10 per share

The company said its revenue was up 6 per cent to $US27.23 billion ($41.63 billion).

Its Western Australia Iron Ore operations remain the lowest cost major producer globally and BHP said it set new production records for copper at its operations in South Australia and Chile mines.

“China demand is healthy despite weakness in housing and India remains a bright spot,” the miner said.

“In Australia, the mining industry is facing near-term headwinds in developing resources and it’s essential that the right industrial relations and fiscal settings are in place to support the sector’s ability to compete and win in global markets.”

Long term mega-trends playing out around the world around continue to underline BHP’s confidence in future demand for steel, non-ferrous metals and fertilisers, it said.

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