Mining giant BHP slumps to record loss

Commodity prices are recovering - but too late for the current results

Mining giant BHP Billiton has reported a record loss for the past year following a mining disaster in Brazil and a slump in commodity prices.

The Anglo-Australian commodities firm reported an annual net loss of $6.4bn (£5bn) for the year to 30 June.

The global mining sector has seen years of weak demand attributed largely to slowing growth in China.

BHP results were also hit by costs after the Samarco mining disaster in Brazil, which killed 19 people.

The record losses come after the company had reported a $1.9bn net profit.

"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.

Underlying earnings for the past year, which strip out one-off costs, came in at $1.22bn.

Ongoing uncertainty

The financial fallout from the Samarco mining tragedy is still not clear though warns James Butterfill, head of research & investment strategy at ETF Securities.

"There's a huge uncertainty overhang," he told the BBC. "The report hasn't been published with regard to the Samarco dam collapse and there's currently a $48bn lawsuit. It's unrealistic to be that amount, but this is really BHP's Macondo well incident theoretically that BP endured."

The company also slashed its payout, setting a final dividend of 30 cents, compared with 62 cents last year. That follows BHP's decision in February to abandon its previous dividend policy, where shareholders were given gradually higher payouts.

19 people died when a dam broke at mine in Brazil partly owned by BHP Billiton

The difficult market situation led global ratings agency Standard & Poor's to downgrade BHP's rating from A+ to A earlier this year.

However, with regard to the slump in the commodities market, the outlook is expected to improve.

Michael McCarthy, an analyst at CMC Markets in Sydney, told the BBC: "There are signs in the commodity prices - and in particular for iron ore and oil - that they have stabilised.

"The demand might be edging back to equilibrium again and that's good news for the longer term for BHP shareholders."

BHP Billiton is one of the world's largest producers of major commodities including iron ore, metallurgical coal, copper and uranium, and has substantial interests in both conventional and shale oil and gas and energy coal.

BHP was founded in the mid-1800s in Australia, while Billiton's roots can be traced back to a tin mine in Indonesia in 1851. The Anglo-Dutch company merged with BHP in 2001 to form a global mining giant.