PERTH (miningweekly.com) – Mining major BHP Billiton has more than doubled its net profit to $3.2-billion for the six months ended December 31.

This was up 157% from the $7-billion loss reported in the six months to December 31, 2015.

Underlying earnings before interest, taxes, depreciation and amortisation (Ebitda) were also up by 65% year-on-year to $9.8-billion.

“This is a strong result that follows several years of a considered and deliberate approach to improve productivity and redesign our portfolio and operating model. Our steadfast commitment to this plan has positioned us to take full advantage in a period of higher prices with underlying Ebitda up 65%,” said BHP CEO Andrew Mackenzie.

“The demerger of South32 and over $7-billion of asset sales have shaped a portfolio that is now true to its strategy. Our assets are large, long-life and low cost, and provide exposure to a diverse mix of commodities with an attractive outlook.

“Our new operating model has sharpened the focus of our operations on the things that matter most – safety, volume and cost. A decline in unit costs at our major assets supported $1.2-billion of productivity gains in the half, which followed the $11-billion of annualised gains embedded over the last four years.”

Mackenzie noted that greater productivity and increased capital efficiency supported strong free cash flow generation of $5.8-billion, while strict adherence to the company’s capital allocation framework maximised the use of this cash.

Revenue for the half-year was up by 20%, to $18.79-billion, with iron-ore delivering the largest slice of the pie, at $6.9-billion, followed by the copper operations with a $4.2-billion contribution, while the petroleum operations contributed some $3.3-billion. The coal division generated $3.9-billion in revenues.

Iron-ore production during the half-year increased by 4%, to 118-million tonnes, with BHP on Tuesday telling shareholders that full-year production guidance remains unchanged at between 228-million and 237-million tonnes, or between 265-million and 275-million tonnes, on a 100% basis.

Copper production for the half-year decreased by 7%, to 712 000 t, owing to reduced volumes from the Olympic Dam operation, in Australia, as well as maintenance at the Pamapa Norte project, in Chile, and lower copper grades at Antamina, in Peru.

Copper production for the full year was currently under review as a result of ongoing industrial action at the Escondida mine, in Chile.

Meanwhile, petroleum production for the interim period decreased by 15%, to 105.9-million barrels of oil equivalent, as higher production at the Bass Strait and North West Shelf operations offset natural field decline across the portfolio and the onshore US operations reported a 31% decline in production as a result of a decision to defer development activity for value and natural field decline.

For the full year, petroleum production is excepted to reach between 200-million and 210-million barrels of oil equivalent.

BHP on Tuesday also reported that metallurgical coal production during the period under review increased by 1% to 21-million tonnes, while energy coal production decreased by 4% to 14-million tonnes.

Metallurgical coal production for the full year is estimated to be 44-million tonnes, while energy coal production is slated to be 30-million tonnes.

During the 2017 financial year, BHP is also expected to spend some $5.6-billion on capital projects, with a further $6.3-billion to be spent in 2018.

“We are still optimistic about the future when we look at the patterns of demand and supply to 20 and 30 years out, but in the near term, a lot of challenges remain. After this period of weak prices, which I think we weathered really well, prices of commodities are trading above what we believe are appropriate to focus on long term,” Mackenzie said.

“In addition, I think we all agree there has been a marked rise in geopolitical uncertainty and, perhaps more seriously, protectionism, which blows most people an ill wind and has the potential to inhibit international trade, which is the lifeblood of the global economy; and that will weigh on business confidence and will strain job creation and investment.”

However, Mackenzie said in a teleconference on Tuesday that the changes the company had implemented in recent years were, in part, designed to navigate these uncertainties with greater strength and increase flexibility and agility.

“The demerger of South32 was a very sensible thing to do, and over $7-billion in asset sales has shaped our portfolio to one that is true to our strategy.

“I am confident we have everything in place to build significant value into the future and to continue to build on our momentum of increasing safety and productivity,” Mackenzie said.