BHP BILLITON will reveal this week that is has ridden the global commodities boom to record the biggest profit ever made by a mining company.
The Australian-based mining giant is set to unveil full-year earnings of $US22.1 billion, well ahead of its previous record in 2008, when commodity prices peaked before the recession sent them falling.
Analysts expect the company to reward shareholders with an increase in the dividend of as much as 20 per cent.
The scale of the profits bonanza - nearly twice the $US12.4 billion it made in 2010 - is likely to rekindle questions about what chief executive Marius Kloppers plans to do with all this money.
BHP completed a $US10 billion share buyback earlier this year and has spent another $US17 billion buying companies. Mr Kloppers announced the latest deal last month, when he agreed to pay $US12.1 billion for the takeover of Petrohawk, an American producer of shale gas.
Analysts said Mr Kloppers will thus be limited to smaller, tactical takeovers and to investing the billions required to bring new mines to production.
The company has benefited from the recovery in three big commodities - iron ore, coal and oil. All saw demand and prices recover last year after a fall in 2009. The rebounds were due mainly to China and India, where economic growth has returned to pre-recession levels.
Investors are worried, however, that the turmoil in the stock markets portends another recession. The price of gold has consistently set new records in recent weeks as investors put money into what is seen as a safe haven.
Markets will look to Glencore for any sign of a slowdown when the world's largest commodities trader reveals second-quarter earnings on Thursday.The company has had a rough ride since its record-breaking float in May. Its shares have dropped by a third after disappointing trading and a flurry of downgrades to profit forecasts.
Credit Suisse expects the company, which delivers huge quantities of oil and other raw materials all over the world, to have earned $US1.5 billion in the second quarter - an 11 per cent reduction on its performance in the first quarter, which the bank called “a disappointment”.
It added: “There is a degree of investor nervousness head- ing into the second-quarter numbers, partly down to the first-quarter results and partly down to the sharp fall in commodity trading profits reported by a number of large investment banks.”
The Sunday Times