Mining Companies Are Back in the Black – by Scott Patterson and Rhiannon Hoyle (Wall Street Journal – February 21, 2017)

Coming out of a punishing downturn, executives are still cautious despite the return to profitability

The world’s biggest miners are profit machines again, cashing in on soaring commodity prices and rewarding investors who stuck with them through a brutal downturn.

BHP Billiton Ltd., the world’s largest miner by market value, said Tuesday it earned a net profit of $3.2 billion for the second half of 2016 after posting a $5.7 billion loss in the year-ago period. Anglo American PLC, the fifth-largest mining company, reported a net profit of $1.6 billion for all of 2016, a dramatic rebound from 2015, when it lost $5.6 billion.

The solid performance builds on strong results posted by British-Australian miner Rio Tinto PLC, which two weeks ago said it earned $4.6 billion in 2016 following a loss of $866 million in the prior year. Switzerland-based Glencore PLC is scheduled to release 2016 results on Thursday, with analysts widely predicting a return to profit.

The swift return to profitability for the world’s mining giants has surprised analysts, investors and executives alike. Few predicted sustained rallies in everything from iron ore to coal to copper last year. Now that the miners have dug themselves out of a hole, the question is whether they can keep from sliding back in, executives and analysts say.

Global mining companies are in better shape now then they were two years ago, when a steep decline in commodity prices sent their shares reeling, experts say. The most significant change: less debt.

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