By Alex MacDonald

 

BHP Billiton Ltd (BHP) is prepared to delay the development of its Jansen project if the timing isn't right, but the world's No. 1 miner by market value still believes in the investment if done correctly, CEO Andrew Mackenzie said Tuesday.

BHP recorded its worst-ever annual loss of $6.39 billion on Tuesday after ratcheting $7.7 billion in charges exacerbated by a deep slump in commodity prices. The loss deepens the gloom in the global mining sector, which has responded to global economic uncertainty and low prices for commodities from copper to iron ore by closing mines, laying off workers and slashing returns for investors. BHP said it continues to seek $2.2 billion in savings over the two years ending next June by making its operations more productive.

BHP is spending $2.6 billion to sink two shafts at Jansen in Canada, of which 60% has been completed. BHP will have to decide whether to spend more to develop the project once it completes the two shafts in 2018 or 2019, Mr. Mackenzie said.

"If the market is not ready for [more] potash in three years...there's a possibility we can mothball the shafts" until the market recovers. In the meantime, the company plans to continue reducing the project's costs while seeking a partner for the project, he said.

Mr. Mackenzie also joined the head of Rio Tinto's iron-ore business in criticizing a proposal from a Western Australia lawmaker to increase taxes on its operations in the state, saying that "it feels a bit unfair" that BHP and Rio Tinto have been singled out for a tax rise.

Brendon Grylls, the new leader of the Nationals party in Western Australia, said he would seek to raise a state tax on iron-ore mining paid by Rio Tinto and BHP Billiton to 5 Australian dollars (US$3.80) a metric ton from 25 cents. The Nationals party is the smaller party in a ruling alliance with the state's Liberal Party.

"We have made a phenomenal contribution on all levels and it seems unfair" for just us to be chosen to pay more taxes, Mr. Mackenzie said on a call with equity analysts after announcing its results.

"We paid $65 billion of tax in Australia....by investing $25 billion in the last 10 years," spending $20 billion on services, and $300 million on the local community. If the tax were to increase, this could impact BHP's investment decisions in the region, where it employs thousands of people, said Mr. Mackenzie.

Mr. Grylls said the tax increase could raise billions of Australian dollars in the coming years for the state as its government looks for ways to plug a budget deficit.

Melbourne, Australia-based BHP reported a net loss of $6.39 billion for the 12 months through June, compared with a year-earlier net profit of $1.91 billion. Underlying profit, stripping out one-time charges, slumped 81% to $1.22 billion.

 

(Riannon Hoyle contributed to this article)

 

Write to Alex MacDonald at alex.macdonald@wsj.com

 

(END) Dow Jones Newswires

August 16, 2016 08:25 ET (12:25 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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