SINGAPORE BHP Billiton Plc posted a 57.8-percent slump in profit in its fiscal-2013 first half on substantially lower commodity prices, a weak dollar and inflation despite stronger volumes and operating cost savings, the global miner said Feb. 20.
The London-based miner logged net income of $4.24 billion for the six months ended Dec. 31, down 57.8 percent from the year-prior period. Revenues slipped 14.1 percent in the first half to $32.2 billion vs. $37.5 billion in the same comparison.
The company took one-time impairment charges of $1.44 billion on its aluminum and nickel assets, following other miners such as Rio Tinto Plc in writing down underperforming assets (amm.com, Feb. 14
BHP said it had curbed costs by $944 million in the first six months of its fiscal year but did not outline future targets for cost cuts.
Last May, BHP said it would shelve its plan to spend $80 billion through 2015 on development and expansion projects. Rival miner Rio Tinto Plc plans to cut costs by more than $5 billion by the end of 2014.
The global economy looks set to benefit from a period of improving economic growth, BHP said. China will remain the primary driver of commodities demand and its cyclical recovery is in place.
BHP added that demand growth rates for many of its core products within China were expected to remain in the range of 2 to 4 percent per year.
A robust supply growth in copper is expected to result in a more balanced market in the near term, BHP said. (Copper) prices will need to remain high enough to induce development of lower-grade, higher-cost supply, the company said.
However, BHP expects iron ore prices to remain volatile in the short term.
Aluminum is expected to remain in overcapacity as Chinese aluminum producers continue to expand aggressively, it said.
Captive low-cost power in the western provinces has enabled Chinese capacity to shift down the cost curve, it said, adding that the cost curve will further flatten, and the price is expected to remain below the marginal cash cost of production.A version of this article was first published by AMM sister publication Metal Bulletin.