BHP Billiton (BLT-GB), the world’s largest mining firm by market value, reported a record $6.4 billion annual loss on Tuesday, hammered by a bad bet on shale, a dam disaster in Brazil and a commodities slump.
“While commodity prices are expected to remain low and volatile in the short to medium term, we are confident in the long-term outlook for our commodities, particularly oil and copper,” Chief Executive Andrew Mackenzie said in a statement.
Even excluding $7.7 billion in writedowns and charges, underlying profit slumped 81 percent to $1.2 billion for the year to June 2016 from $6.4 billion a year ago, hit by weak iron ore, copper, coal, oil and gas prices. The underlying profit was better than analysts’ expectations of around $1.1 billion.
Before the release, UBS analysts had calculated that the loss could be BHP Billiton’s largest corporate loss since the formation of the dual-listed company which was a merger of BHP Limited and Billiton Plc in 2001. UBS confirmed Tuesday morning that it was its worst-ever loss and believes it to also be the largest reported loss for BHP since its inception in 1851.
The huge loss resulted from one-off charges booked after the collapse of a dam at the Samarco iron ore site in Brazil in November. The site was run as a joint venture with Brazil’s Vale and the dam’s collapse killed 18 people, with one person still missing, according to BHP Billiton. The flooding wrecked farm land and reached towns, preventing people from returning to their homes.
The Anglo-Australian company had previously said it would book charges of $1.1-1.3 billion.
BHP Billiton Group is headquartered in Melbourne, Australia. It is listed on the Australian Securities Exchange and the London Stock Exchange, with a secondary listing in Johannesburg.
The London-listed stock is a component of the benchmark FTSE 100. It has jumped by 37 percent this year, but remains far-below levels traded at prior to the commodities rout of July 2014 onward.