Global slowdown takes toll on miners

Mining giants Glencore Xstrata and BHP Billiton yesterday reported poor results for the first half, underscoring the bleak outlook for the commodities market amid slowing global growth.

BHP said net profit dropped 29.5 per cent to US$10.88 billion in the year to June, citing slowing global growth and commodity price volatility.

The world's biggest miner said lower prices for its key resources, including a 17 per cent dive in iron ore, wiped US$8.9 billion from underlying earnings of US$28.4 billion.

"BHP delivered robust financial results in the 2013 financial year, a period characterised by slowing global growth and volatile commodity markets," the miner said in a statement to the Australian stock exchange.

"Economic conditions over the second half of the 2013 financial year were affected by lower-than-expected growth in emerging economies. Weaker trade and soft manufacturing activity pulled growth rates slightly below expectations in China."

New chief executive Andrew Mackenzie said softer Chinese trade and manufacturing data provided evidence of the "transition under way in their economy" but BHP was "confident of [gross domestic product] growth in China of 7 to 8 per cent".

Meanwhile, newly merged commodities and mining group Glencore Xstrata reported a near US$9 billion loss as it wrote down the value of its mining assets by US$7.66 billion.

Although the merger between Glencore and Xstrata, completed in May, created an industry giant that controls a chain of businesses in mining, refining, storage and shipping of basic commodities like coal and copper, trading conditions have been tough.

The write-down, the Swiss-based company said, reflected "the broader negative mining industry environment" and the heightened risks of taking on some big projects during the January-June period.

Overall, the company said its net income excluding exceptional items fell 39 per cent to US$2.04 billion from the US$3.36 billion it would have made a year earlier.

However, when including charges such as the write-down of the mining assets, it reported an US$8.9 billion loss, in contrast to a US$2.3 billion profit last year.

Agence France-Presse, Bloomberg, Associated Press