Miners back in profit on recovering metals prices

London (AFP) - Two of the world's top mining firms returned to profit with a bang on recovering iron ore and coal prices, higher output, cost cutting and asset sales, results showed Tuesday.

BHP Billiton, the world's biggest miner, posted net profit of US$3.2 billion (3.0 billion euros) for the second half of 2016, a sharp contrast with the post-tax loss of $5.7 billion posted in the same period in 2015.

At the same time, Anglo American said its full-year net profit came in at $1.6 billion in 2016 compared with a loss after tax of $5.62 billion during 2015.

Both companies reduced debt by billions of dollars but were cautious over the outlook, with iron ore prices set for more volatility.

"Looking forward, an uncertain economic outlook means BHP is not counting any chickens yet," said George Salmon, equity analyst at Hargreaves Lansdown.

Meanwhile, Anglo's focus "remains on ensuring the balance sheet is able to withstand expected price volatility", said AJ Bell investment director Russ Mould.

Following the results, BHP's share price rose 0.2 percent on the London market while Anglo fell 0.7 percent compared with Monday's close.

- 'Strong' BHP performance -

Describing BHP's performance as "strong", chief executive Andrew Mackenzie voiced confidence in the long-term outlook for commodities, particularly oil and copper.

The company had already reported record Australian iron ore production for the last six months of 2016 after a 28-percent surge in the price of the commodity year-on-year.

The BHP results represented what analysts hailed as an "impressive" turnaround after big drops in commodity prices forced the firm into an annual net loss of US$6.39 billion, its worst-ever.

"While the recent improvement in commodity prices has provided a pretty strong tailwind, investors shouldn't ignore the group's excellent progress on cost control," said Salmon.

For copper, BHP said it would revise output guidance at Chile's Escondida mine, the biggest in the world, where 2,500 workers are on strike.

BHP added that "the (iron ore) market is likely to come under pressure in the short term from moderating Chinese steel demand growth, high port inventories and incremental low cost supply".

Iron ore prices have risen from a low of $40 per tonne in 2015 to around $90 this month.

Metallurgical coal prices also surged in the last six months "driven by pronounced shortages in both domestic Chinese and seaborne supply", BHP said.

BHP's profit rebound comes amid ongoing settlement negotiations over the fatal November 2015 Samarco mine collapse in Brazil.

Samarco -- co-owned by BHP and Vale -- is facing massive legal costs for the tragedy, in which 19 people died, an entire village was destroyed and water and supplies were cut off to tens of thousands.

BHP said last month it had struck an agreement with Brazilian prosecutors to negotiate the settlement of a 155-billion-real claim (US$50 billion) by June 30.

"Restart of (Samarco) operations remains a focus but will only occur if it is safe, economically viable and has community support," BHP said in its results.

As for Anglo, group revenue rose 1.0 percent to $23.14 billion last year, with the company benefitting also from the dollar's rally against the South African rand.

"Despite our significant progress... the balance sheet must be able to withstand expected price volatility in the short to medium term," said chief executive Mark Cutifani.

He added that Anglo had reduced net debt by a third to $8.5 billion.

The group's diamond business De Beers meanwhile enjoyed a 42-percent rise in underlying profits to $1.4 billion.

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