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BHP to Trump: protectionism will hurt growth, commodity demand

A resurgent iron ore price has buoyed earnings at BHP

Last year's result was marred by slumping commodity prices, Oil, coal and iron ore were in the doldrums.

"China is steady as she goes", says BHP CEO Andrew Mackenzie, even while saying reduced stimulus in China and new supplies likely will hurt prices for bulk commodities.

The comments come less than two months after Mr Mackenzie met US President Donald Trump in NY, who has flagged several isolationist policies including tariffs on imports from BHP's biggest customer, China.

Mr Mackenzie said he had discussed trade, climate change and the importance of carbon capture and storage with Mr Trump.

He said he also pressed the importance of the global climate-change agreement reached in Paris, which BHP supports, although he declined to comment on Mr. Trump's responses in the meeting.

For the first half, attributable profit was $3.20 billion or 60.2 U.S. cents per share, compared to prior year's loss of $5.67 billion or 106.5 cents per share.

"The Chinese economy is going quite strongly at the moment, partly down to stimulus that was stated probably about three quarters back, and that has really pushed up the premia for high quality iron ore and metallurgical coal and they're our principle products".

Free cash flow was boosted by strong operating performance and improving capital productivity, which led to FCF of $5.8 billion. Capstone Asset Management Co. now owns 57,637 shares of the mining company's stock valued at $1,751,000 after buying an additional 950 shares during the period. The company has a 52-week high of $37.44. Our steadfast commitment to this plan has positioned us to take full advantage in a period of higher prices with Underlying EBITDA up 65 per cent to US$9.9 billion.

Cutifani spoke of targeting "an incremental US$1bn of net cost and volume improvements" this year, and argued that there was no need to sell any more assets, other than for purposes of streamlining.

The miner has been buffeted by the fallout from the Samarco dam disaster in Brazil, which resulted in the loss of more than 15 lives and $US47.5 billion in damages claims, with some investors putting their weight behind a class action that could cost BHP as much as $US2.2 billion in claimed losses. Financial prudence remains the priority.

"'There are no bad commodities, only bad projects", he said. What's more, the real bugbear of the markets, debt, now appears to be well under control. While Anglo's iron-ore and coal businesses "are making a great contribution", he said, "I have to say we don't think these prices will hold up in the long term". The 52-week low of the share price is $19.0601.

The improved result was largely driven by continued productivity gains and stronger prices for iron ore and coking coal, with the average price for the latter 250 per cent better during the period than in the December half of 2015. The Iron Ore segment is engaged in mining of iron ore.