Miners Enjoy Fastest Comeback in a Decade on Surging Profits – by Kevin Crowley and David Stringer (Bloomberg News – February 21, 2017)

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The speed of the mining recovery is faster than anything that’s been seen in the past decade. BHP Billiton Ltd. and Anglo American Plc on Tuesday reported the biggest profit increases since at least 2007 on deep cost cuts and rebounding metal prices. The earnings exceeded analysts estimates and highlight mining’s dramatic reversal of fortune in the past year.

The industry is coming back from a crisis that forced some of the top metal producers to sell assets, cut costs and rein in spending after years of over-investment. Metal prices have largely recovered from the downturn and several of the biggest mines are profitable, instead of bleeding cash.

“You can see how cash generative this business can be,” Paul Gait, an analyst at Sanford C. Bernstein Ltd. in London, said by phone. “I think 2017 is a year of strategic re-positioning and rethinking.”

BHP, the world’s biggest mining company, boosted its dividend more than analysts expected and said it will carry out a bond buyback of $2.5 billion. Underlying profit rose to $3.24 billion in the six months through Dec. 31, the highest in two years and a more than 600 percent increase from a year earlier.

Anglo canceled plans to sell several assets after higher earnings eased pressure on the company to reduce debt. Nickel mines in Brazil and coking coal assets in Australia will no longer be sold, Chief Executive Officer Mark Cutifani said in an interview on Bloomberg Television.

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