Does BHP's Profit Drop Spell Doom for the Mining Boom?

By Bizclik Editor

Last month, Deloitte Access Economics released a report forecasting an end to Australia’s mining boom within the next two years.

When BHP Billiton, the biggest player in the Australian share market, posts its first profit drop in the past three years on Wednesday, some may begin to wonder if this indeed is the beginning of the end.

With decreasing demand growth in China, the nation’s biggest customer in terms of iron ore, coal, copper and other mineral imports, resulting in softening mineral values, there is a good chance that BHP may call for an operations reduction at several of its Australian coal mines. The mining company already closed one of its mines in the Bowen Basin earlier this year.


Click here to read the latest issue of Business Review Australia

In 2011, BHP posted US$22 billion in operating profits – an Australian corporate record, according to the Sydney Morning Herald. This week, BHP will reportedly post a US$16.9 billion net profit.

"Against a backdrop of increasing costs and falling commodity prices, we continue to focus on reducing our overheads and operating costs," BHP told Reuters. “We don't intend to provide any detail about specific adjustments, but clearly there may be some impact on jobs in some areas.”

Rival company Rio Tinto faces a similar situation with the closing of its Blair Athol Mine in Central Queensland, which could leave an undisclosed number of employees jobless after this year.

Still, the question remains: do the decreased profits from our largest mining companies signify the doom of the mining boom? According to Morningstar resource analyst Mark Taylor, it is possible:

''I think we have pretty much seen the pinnacle. They will plateau for a couple of years as rising volumes are offset by softening prices,'' Taylor told the SMH.


Featured Articles

Hybrid live event shaping the future of Sustainability & ESG

Sustainability LIVE London returns for a two-day, multi-track conference programme featuring inspirational ESG speakers, debates and discussions

Nine must-attend sustainability events for business leaders

From London to Abu Dhabi, Singapore to San Diego, these sustainability-focused events are designed to help business leaders action their ESG goals

Daniel Weise of BCG on new supply chain and procurement book

Daniel Weise, global leader of Boston Consulting Group’s procurement business line, on the timely publication of his new book, Profit From The Source

Attract and retain talent with flexible working and benefits

Human Capital

Nurturing the next generation of women leaders in Africa

Leadership & Strategy

5 Mins With: Cybersecurity expert Ariel Parnes of Mitiga