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The bank may cut the value of BHP Billiton by $US2 billion
Edited by : AL CIRCLE
2 min read
BHP Billiton may have to write $2 billion off the value of its aluminium assets as the global economy struggles, industry experts say.
And more writedowns could follow if there is no let-up in the poor conditions buffeting the sector, they say.
According to research published by Bank of America analysts, BHP's aluminium business is experiencing "very difficult" conditions.
The bank may soon need to cut the value of the unit by $US2 billion ($2.02 billion) in a "worst case" scenario, the analysts say.
BHP merged its aluminium and nickel operations last month. In February, rival Rio Tinto wrote almost $US9 billion from the value of its aluminium division.
The Bank of America assessment follows reports in Britain that BHP has cut its forecasts for medium term commodity prices.
According to London's Financial Times, BHP had cut its forecasts as part of an internal review.
BHP spokeswoman Kelly Quirke rejected the speculation, saying it was based on a presentation made by chief executive Marius Kloppers last month. The mining giant had not changed its forecasts since, she said.
Mining companies use internal commodities forecasts to assess the profitability of their pipeline of investment projects.
Mr Kloppers last week stoked speculation that the miner might put the Olympic Dam mine expansion on ice indefinitely. Olympic Dam is estimated to contain 80 million tonnes of copper, 5.4 billion pounds of uranium and 94 million ounces of gold.
BHP has also flagged it is considering freezing $80 billion worth of Australian projects, including an extension to shipping facilities at Port Hedland, Western Australia.
Blaming a change in the "environment" facing major miners, BHP chairman Jacques Nasser last month said the fate of its five-year growth plans was pondered "every day". with Bloomberg
And more writedowns could follow if there is no let-up in the poor conditions buffeting the sector, they say.
According to research published by Bank of America analysts, BHP's aluminium business is experiencing "very difficult" conditions.
The bank may soon need to cut the value of the unit by $US2 billion ($2.02 billion) in a "worst case" scenario, the analysts say.
BHP merged its aluminium and nickel operations last month. In February, rival Rio Tinto wrote almost $US9 billion from the value of its aluminium division.
The Bank of America assessment follows reports in Britain that BHP has cut its forecasts for medium term commodity prices.
According to London's Financial Times, BHP had cut its forecasts as part of an internal review.
BHP spokeswoman Kelly Quirke rejected the speculation, saying it was based on a presentation made by chief executive Marius Kloppers last month. The mining giant had not changed its forecasts since, she said.
Mining companies use internal commodities forecasts to assess the profitability of their pipeline of investment projects.
Mr Kloppers last week stoked speculation that the miner might put the Olympic Dam mine expansion on ice indefinitely. Olympic Dam is estimated to contain 80 million tonnes of copper, 5.4 billion pounds of uranium and 94 million ounces of gold.
BHP has also flagged it is considering freezing $80 billion worth of Australian projects, including an extension to shipping facilities at Port Hedland, Western Australia.
Blaming a change in the "environment" facing major miners, BHP chairman Jacques Nasser last month said the fate of its five-year growth plans was pondered "every day". with Bloomberg
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