Analysts expect BHP Billiton Limited to write down the value of its Australian aluminum and nickel assets by some USD 4B in February in response to the continued strength of the Australian dollar and weak aluminum prices which have undermined hopes for a short term recovery.
The miner’s Australian aluminum and nickel assets are expected to register losses of about USD 600M during this financial year.
In delivering a solid Q1 production report which showed strength in its major units of iron ore, coking coal, copper and petroleum BHP said that although its least profitable nickel and aluminum businesses posted strong production results their outlook has not improved.
The company said that the strong Australian dollar and weak pricing environment continued to place pressure on the group’s Australian alumina and nickel operations.
Any move to write down the value of the two businesses would come when BHP reports its H1 results in February.
The prospect of BHP slashing its book values has received renewed attention in the past week, since rival miner Rio Tinto announced USD 14B in write-downs and the departure of chief executive Tom Albanese and strategy boss Doug Ritchie.
Tim Schroeders , Pengana Capital Fund Manager, said that “The aluminum and alumina performance probably isn’t going to prevent a possible write-down. I don’t think those assets are making any money.”
