Vancouver — Strong prices for iron ore and increased coal sales in Asia propelled the world’s biggest mining company to a profit of US$608 million (or 10 per share) in the fiscal first quarter ended Sept. 30.
In the first full quarter since its US$11.6-billion merger,
“This is a solid result, and it was achieved despite the slowdown in the global economy,” says Chief Executive Officer Paul Anderson.
On the downside, the base metals unit suffered a US$83-million drop in profits because of lower copper, silver and zinc prices, while the steel division, which added US$78 million less to its bottom line than in the year-ago period. Lower commodity prices cut earnings, before interest and tax, by US$185 million.
BHP Billiton intends to slash US$270 million from annual costs at a time when metals prices are sliding in the face of shrinking demand.
“Reducing costs remains a prime area of focus,” states Deputy CEO Brian Gilbertson.
New and acquired businesses, such as Colombian Coal Mines, boosted pretax earnings by US$125 million, while cost-cutting added US$15 million.
“Since the announcement of the merger in March, BHP Billiton has invested about US$1.6 billion in capital and growth activities,” says Anderson.
The carbon steel materials division, the largest exporter of coking coal and the number-three producer of iron ore, recorded earnings, before interest and tax, of US$292 million, a 38% increase over the year-ago period. Iron exports from BHP Billiton’s mines in Western Australia rose 7% to a record level during the quarter, owing to higher demand from China.
The steaming coal unit, which exports material used in power generation, saw earnings more than double to US$149 million. The increase is attributed both to a 20% rise in contract prices and the inclusion of new mines.
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