BHP BILLITON LTD NPV (OTCMKTS:BHPLF)’s CEO, Andrew Mackenzie, has expressed optimism that the recent slump in commodity prices might be coming to an end. He made the announcement, whilst talking to an Australian newspaper. However, the CEO did stay realistic and stated that the change would be slow and market demand would be initially lower than the supply. Mackenzie also revealed that his company has been exercising cost cuts and improving its productivity, in order to be ready for a rebound.
BHP recently cut its dividend, the first time in 15-years, after suffering a 92% decline in profits, for the first half. The company is considered to be one of the largest mining companies in the world. Mackenzie also clarified that a deeper analysis of the commodities market does show a positive change in the pricing of commodities that BHP deals with.
Apart from suffering a blow in the commodities market, BHP also faces huge fines and billions of dollars in compensations, owing to the Samarco mine disaster. However, since a settlement has been reached, BHP is planning to restart operations in the mine and has increased its staff in the region, by a factor of three. BHP had been working on the project with Vale SA and the two companies are obliged to pay $1 billion in fines and $3.3 billion in damages by 2022. Achieving this target would be a difficult task, if the mine does not open or the commodities market does not take a turn.
BHP hopes that an increase in staff would not only help the mine reopen quickly, but also prevent any future disasters. Dean Dalla Valle, BHP’s CCO, has relocated to Brazil and is working hard to get Samarco back into operation. It should be noted here that before the mine was shutdown, it was the second largest producer of iron ore, at 30 million metric tons a year. However, once the mine reopens, BHP believes it would produce 19 million metric tons annually.
BHP BILLITON LTD NPV (OTCMKTS:BHPLF) completed the April 11 trading session, with a gain of 3.76%, to reach a close at $12.88.