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BHP boosts payout on commodities surge

Tuesday, February 21, 2017 - 01:38

Mining giant BHP Billiton has rewarded shareholders with a bigger than expected payout, reflecting a growing confidence across the sector as rising commodity prices delivered a cash windfall. As Ivor Bennett reports, BHP and other miners are basking in a welcome surge in commodity prices on the back of a renewed appetite in China for imported raw materials.

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They may not be rock solid but commodity prices are at least moving in the right direction for miners. Iron ore climbed more than 80 percent last year; coal more than 300 percent. Helping BHP Billiton generate 3.2 billion dollars of underlying profits - 8 times what they were last year. CEO Andrew Mackenzie did still warn of economic and political uncertainties. Stressing the company's primary focus is to pay down its 20-billion-dollar debt. But that didn't prevent a shareholder windfall, which at 40 cents a share, was much bigger than expected. SOUNDBITE (English) TOM STEVENSON, INVESTMENT DIRECTOR, FIDELITY INTERNATIONAL, SAYING: "Last year BHP announced that it was abandoning its progressive dividend policy and that it was going to move to a policy whereby it would pay out half of its profits in the form of dividends. That would have implied a 30 cent dividend so they've actually paid a bigger dividend than was expected." It's a dramatic turnaround from the rock bottom rewards of last year. The confidence in the market shared by Anglo American, one of the worst affected by last year's slump, who said they'll reinstate dividends at the end of the year. But others are more skeptical that China's renewed appetite will last. SOUNDBITE (English) TOM STEVENSON, INVESTMENT DIRECTOR, FIDELITY INTERNATIONAL, SAYING: "The growth outlook in the developed world is certainly improving. There's perhaps more of a question mark over what's going on in china and that's absolutely key to many of the industrial metals." Guidance for copper production is also under review, as a strike at BHP's Escondida mine in Chile - the biggest in the world - enters its 12th day.

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BHP boosts payout on commodities surge

Tuesday, February 21, 2017 - 01:38