BHP offers a small increase in the dividend if profits fall by 8 percent

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The miner confirmed that he suffered damages of $ US835 million in mid-December due to unscheduled production interruptions at his Olympic Dam facility in South Australia, an iron ore derailment at iron ore operations in Western Australia and fires at his Spence factory and its Nickel West smelter.

The financial blow was partially compensated by the build-up of inventory levels during power outages, as well as record production volumes in the Jimblebar iron ore mine and the South Walker Creek coal mine in Queensland.

"We expect a strong performance in the second half of the year to compensate for the negative productivity movements during this period, which means that the overall movement for the whole year will be largely flat compared to the previous forecast of US $ 1 billion," said BHP.

"We will continue to drive productivity gains, as we unlock value through technology with the continued automation of our supply chain, reduce our dependence on labor hire through the further rollout in Australia of our Operations Services initiative to leverage best practices in manufacturing and maintenance, and continue to set records for underground development, use of equipment, milling and production in all our operations. "

The profit result of $ US4.03 billion is a measure of the "underlying attributable profit" of the BHP group from continuing operations. But on a legal basis, BHP's earnings rose 87 percent to $ US3.76 billion.

BHP Iron ore is transported to Port Hedland in the Pilbara region of Western Australia.

BHP Iron ore is transported to Port Hedland in the Pilbara region of Western Australia. Credit: Tony McDonough

According to the financial advisory firm Vuma, consensus analysts expected BHP to report profitable profit of $ US4.21 billion for six months, total revenue of $ US20.69 billion and total underlying earnings before interest, tax, depreciation and amortization (EBITDA) of $ US 10.63 billion.

Analysts had predicted an interim dividend of US53 cents per share. Total revenue, at $ US 20.74 billion from continuing operations, was above expectations. The 55 franc-fixed interim dividend of 55 US dollars will be paid on 26 March.

BHP released the results for half of December after the Australian market closed on Tuesday, but before the London market opened for that day.

In recent weeks, the price of BHP's biggest revenue generator, iron ore, has risen on the world market in response to the waste dam disaster at a Vale mine in Brazil, which is believed to have killed hundreds of people.

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In the aftermath of the disaster it is expected that the exploitation by the Brazilian regulators will reduce the production of iron ore by Vale.

The dam disaster took place after the December half was over, so higher ironer prices were not reflected in the half-year profit of BHP.

But the higher prices, if maintained, will significantly increase the income of BHP and other Australian iron ore producers Rio Tinto and Fortescue Metals Group in the coming half of June.

Vale is a huge producer of iron ore and its production has been disrupted in Brazil because supervisors work hard because of the disaster.

An important industry approach price for iron ore supplied to China increased by 1.7 percent on Monday to $ 88.88 per tonne, because the market expects a shorter market, at least in the short term, for the most important steel production resources. The price closed at a level of $ US94.20 earlier this month, the highest since February 2017.

Before the tragedy, this benchmark spot price was only US $ 40.40 per ton.

Darren is the reporter of mining and agribusiness for The Age and The Sydney Morning Herald.

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