BHP Billiton, the world’s largest diversified mining company, has announced a 29.5% slump in profits to US$ 10.876 billion from US$ 15.417 billion in the previous year, citing slowing global growth and commodity price volatility.
“Economic conditions over the second half of the 2013 financial year were affected by lower than expected growth in emerging economies. Weaker trade and soft manufacturing activity pulled growth rates slightly below expectations in China,” the company said in its earnings statement. “Supply of iron ore, metallurgical coal and copper more than kept pace with increased demand, leading to a reduction in prices over the period.”
Coal revenue down on weak prices
Last month, BHP Billiton had announced an increase in both thermal and metallurgical coal production for the year to June 2013 on the back of record production from its Australian mines. Thermal coal production grew by 3% on the, while metallurgical coal production grew by 13%.
However, underlying earnings were down by 73% to US$ 746 million as prices continued to drop. Thermal coal prices dropped 18%, while metallurgical prices suffered a 34% drop in hard metallurgical and 31% drop in soft metallurgical coal prices.
The company also said expects increased supply to continue to maintain downward pressure on prices in the short term, but a low investment rate in new projects will help to rebalance supply and demand over time.
Edited from various sources by Sam Dodson
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