After Rio, It’s Now BHP’s Turn to Write Down $4B in Nickel, Aluminium Assets

BHP Billiton (ASX: BHP) seems to be following the footsteps of competitor Rio Tinto (ASX: RIO) in terms of write-downs, firing and commodity production. A week after Rio fired Chief Executive Tom Albanese mainly over the write-down of aluminium assets, BHP said on Thursday that it will likely write off $4 billion of its Australian aluminium and nickel assets by February 2013.

The move, which came with the release of BHP's first quarter production report, is because of the two businesses expected to incur losses of about $600 million for the current financial year.

BHP registered a 6 per cent increase in its iron ore production to 81.962 million tonnes and 7 per cent boost in its crude oil and condensate to 37.264 million bbl in the year to Dec 12, 2012, but reported declines in natural gas, uranium oxide concentrate and metallurgical coal production.

Analysts forecast a $363 million loss for BHP's aluminium assets and $230 million for its nickel operations.

BHP acquired its Australian nickel assets in 2005 when it purchased WMC Resources for $9 billion. But the miner had no recent aluminium assets buy-in recently. BHP explained the losses to the strong Australian dollar and weak pricing environment which continued to place pressure on the two businesses.

Industry observers are now waiting for the announcement when BHP would kick out its chief executive, Marius Kloppers.

Mr Kloppers became chief executive in October 2007. Since then, BHP's shareprices have declined to $37.06 from $44.50. In 2012, BHP stock value was stagnant while broader market share prices went up 13 per cent. However, the Wednesday closing price was actually a 1.3 per cent improvement in contrast to Rio which dipped 0.7 per cent.

Besides the likely axing of Mr Kloppers, BHP is also expected to cut costs, including axe jobs, particularly at its coking coal operations in Queensland which is fast approaching full supply chain capacity.

In 2012, BHP shuttered its Norwich Park and Gregory mines in central Queensland and laid off a few hundred workers from its Brisbane headquarters.