BHP Billiton will cut dividends to cope with the i

BHP Billiton: will cut dividends to deal with the industry downturn

BHP Billiton: will cut dividends to deal with the industry downturn

China Construction Machinery Information

BHP Billiton (BHP), one of the world's four largest mining enterprises, has been quite unlucky recently. It has not only suffered mining disasters, extended the payment period of suppliers, but also been forced to pay taxes by the Queensland government. The analysis points out that BHP Billiton may cut dividends to cope with the industry downturn under the pressure of weak commodity prices, declining profits and other benefits, which are often suppressed by the use of plastic hollow products

within a week, BHP Billiton suffered a series of blows. On November 6, a reservoir of abandoned iron ore in Southeast Brazil broke its dam. As of November 13, the death toll has risen to 9, and 9 people are missing, which may cause serious water pollution and endanger downstream residents. This is one of the most serious mining disasters in Brazil's history. The mine operation is jointly undertaken by BHP Billiton's local joint venture and vale. It is reported that after the accident, the president of Brazil also put pressure on the company, saying that it violated environmental laws and other regulations. According to the analysis of Deutsche Bank, the local mine may be shut down until fiscal 2019, with an annual loss of production capacity of more than 25million tons

BHP Billiton has extended the payment period of some supplier contracts from 30 days to 60 days. However, insiders still pointed out that it is inevitable that BHP Billiton will be greatly impacted both economically and in terms of its reputation

disasters do not come singly. On November 12, BHP Billiton was exposed to be charged as much as $288million in taxes by the Queensland government. The local government claimed that it did not pay the corresponding tax when selling coal in the Singapore marketing center

in fact, the rumors of mining giants including BHP Billiton using the Singapore market to avoid tax had been spread as early as the second quarter of this year, and had been investigated by the Australian tax department, but they all denied tax avoidance. However, it cannot be denied that the news that Singapore is a secret tax avoidance base for commodity giants has been seriously "concerned" by the local government, which will also cause certain difficulties for BHP Billiton to expand its market in the future

as the saying goes, a big tree catches the wind. As one of the mining giants, BHP Billiton has made great efforts to seek development in the overall downturn of the industry environment. According to public information, BHP Billiton split its south32 this year. The latter's business is concentrated in South Africa and Australia, covering coal, manganese, nickel, lead, zinc, silver and other minerals, with assets of US $26.7 billion. At present, it has been listed separately on the Australian Stock Exchange. In addition, BHP Billiton has recently been confirmed to have obtained an oil exploration asset in Western Australia and a Gulf of Mexico lease, and its intention to enter the oil field is clear

cost reduction has always been one of the strategic cores of BHP Billiton. According to BHP Billiton's fy2015 bulletin, its related capital and exploration expenditures have decreased by nearly a quarter year-on-year, and will continue to reduce costs in fy2016. However, at a time when the global economic recovery is unstable and commodity prices are declining, divestiture, accelerating the development of non core businesses or reducing operating costs do not seem to be enough to stop the decline

as of the first half of this year, BHP Billiton's potential profit during the fiscal year 2014-2015 decreased from US $13.3 billion to US $6.42 billion, a year-on-year decrease of 52%; Profit fell from $13.8 billion to $1.91 billion; Revenue fell to $52billion, basically equivalent to the level of a decade ago

some insiders pointed out that a large amount of cash is used to distribute dividends. When the market is poor and enterprises are struggling, the possibility of dividend suspension is high. In fact, at the end of the first quarter of this year, another mining giant, Freeport Macmillan, announced that it had reduced its quarterly dividend by 84%

next, BHP Billiton will be greeted not only by the sluggish global economic growth, especially the decline of China's factors, as well as the adverse effects of the decline in the prices of almost all bulk commodities such as coal and iron ore, but also by dealing with the complex aftermath of the mining disaster, being forced to reduce production locally, and responding to the Queensland Government's request to pay huge taxes. Taken together, BHP Billiton may indeed have to cut dividends to cope with the industry downturn

interestingly, one side is to cut dividends, and the other side is to expand low-cost iron ore production against the backdrop of iron ore prices falling below $50. According to media reports, the motivation for this move is that BHP Billiton believes that it can control costs, and increasing production when prices remain low can increase market share and force inefficient mining enterprises to go bankrupt. BHP Billiton's practice was ridiculed by CNR, the largest iron ore producer in the United States. When the steel plate and flat steel is less than or equal to 30mm, it is "dreaming" and living in the "imaginary world"

in fact, no matter dreaming or cutting dividends, in the open competition market, any company's market strategy is beyond reproach. If someone cuts production capacity, the spring on the reduced supply piston breaks or the spring force is too small, it must be repaired by others. If someone lowers costs, other competitors should also consider lowering costs by 2020. Because this is also the proper meaning of competition