BHP Billiton eyeing acquisitions as it considers dividend cut – by James Wilson and Neil Hume (Financial Times – December 20, 2015)

London – BHP Billiton is stepping up its hunt for acquisitions or new projects, hoping to take advantage of distressed prices at a low point in the commodity cycle and increasing the likelihood that the world’s most valuable mining company will make a dividend cut next year.

BHP is determined not to miss a chance to buy choice assets if rival miners are forced into sales as they try to survive the worst commodities downturn in a decade. The Anglo-Australian miner is looking for copper and deepwater oil projects.

But BHP is acutely aware of potential stresses on its own balance sheet, and particularly its pledge to maintain a strong credit rating, if it were to strike deals.

As a result the group is moving closer to ending its policy of maintaining or increasing its dividend, which has been in place at BHP for more than 25 years, long before it merged with Billiton and became the world’s largest miner by market capitalisation.

A number of the world’s largest miners, including Glencore, Freeport-McMoRan and Anglo American, have already suspended dividend payments as they try to survive the downturn.

A cut in BHP’s annual payout, which cost the miner $6.6bn in its last financial year, could be announced in February. It would provide more flexibility to buy mines from rivals or advance some of the projects on its books, according to people familiar with the company’s thinking.

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