Mining giant BHP Billiton yesterday delayed the expansion of its huge Olympic Dam project as it posted a 34.8 percent slump in annual net profit in a sign the global slowdown is hurting commodities.
The world’s biggest miner put plans to grow the copper and uranium mine in Australia on hold after a 15 percent plunge in underlying earnings due to softer prices for most of its products throughout the year.
BHP’s first profit drop in three years to US$15.42 billion is a significant reversal of fortunes for the company following a record US$23.6 billion profit last year — the largest ever recorded in Australian corporate history.
Though BHP achieved record annual production at 10 of its operations including its flagship west Australia iron ore business, slowing global growth and uncertainty over the outlook hit commodity prices, undercutting profit.
“Concerns surrounding the stability of the eurozone and the decline in economic activity that accompanied the managed slowdown of growth in China led to significant market volatility in the 2012 financial year,” BHP said.
“In the short term, we expect volatility in commodity markets to persist as temporary weakness in the manufacturing and construction sectors across all key markets is expected to weigh on market sentiment,” the mining firm added.
As a result, BHP chief Marius Kloppers said the company would explore a “less capital-intensive design” for its mammoth multi-billion-dollar Olympic Dam expansion, which once completed would make it the world’s largest open pit mine.
“We will continue to work on technological and design alternatives that have the potential to substantially improve the economics of the expansion,” Kloppers said in a statement to the stock market.
In the medium term, BHP said it expected a “measured improvement in the external environment” beginning in the first half of the next financial year, driven particularly by growth in China.
The company declared a dividend of US$1.12 per share, up 11 percent on the previous year, with the stock finishing 0.33 percent lower at A$33.16.