BHP diversity offsets a slump in aluminium and nickel

　　ALUMINIUM and nickel both took hits in BHP's record results but were offset by substantial growth in copper, iron ore and manganese. 　　With the recent sell-off of commodities leading industry observers to predict a downturn in the sector, BHP chief Marius Kloppers remained confident the miner's diversified portfolios would see it through the volatility. 　　Mr Kloppers said the slowdown in China was more muted than the rest of the world and he believed long-term demand would remain robust. 　　"We are seeing significant inflationary problems for the whole industry," Mr Kloppers said in a conference call from London. "But BHP is well positioned to deal with the issues and has a portfolio of growth." 　　Aluminium recorded a significant drop in the full-year results announced yesterday, with a 21.1 per cent decrease in underlying EBIT to $US1.465 billion. 　　The miner blamed unfavourable exchange rate movements as a result of a weaker US dollar and foreign exchange gains in the prior period associated with the Alumar refinery expansion in Brazil, for the reduction. 　　"Aluminium is the product showing weakness at the moment in terms of profit potential," Mr Kloppers said. 　　"But we have a diversified portfolio and while we see aluminium being weaker, we have had strong coking coal." Annual production records were set in seven commodities and production increased in a further six. 　　The company said in its results that higher sales volumes of copper, iron ore, manganese ore, energy coal, diamonds, alumina and aluminium increased underlying EBIT by $US805 million. 　　Lower average LME prices for nickel led to underlying EBIT for stainless steel materials to drop 65.3 per cent to $US1.275 billion. 　　Mr Kloppers predicted a number of nickel players in the industry would not survive as some struggled to make profit, but he said BHP's operations were not in danger of closing. 　　Iron ore continues to be a focus for the miner, with underlying EBIT reaching $US4.631 billion, a 69.8 per cent rise, driven by higher iron ore prices and sales volumes. Manganese had a 549.8 per cent increase to $US1.644 billion, with higher sales prices achieved for alloy and ore and record sales volumes. 　　Copper was also a clear winner for the global mining giant, with its base metals sector recording an underlying EBIT of $US7.989 billion -- an increase of 16.2 per cent -- on the back of record copper production. 　　The diamonds and speciality products sector was another one to record a loss but Mr Kloppers remained confident the portfolio would benefit from its increased focus on potash. 　　"The diamond group is one of our most exciting opportunities. We are entering a new business through potash, which will become an integral part of that sector for us," he said. 　　From: Sarah-Jane Tasker