People walk through the foyer of the BHP Billiton headquarters in Melbourne, Australia. Picture: BLOOMBERG
People walk through the foyer of the BHP Billiton headquarters in Melbourne, Australia, in this file picture. Picture: BLOOMBERG

SYDNEY — Top global miner BHP Billiton slashed its interim dividend by 75% on Tuesday, cutting it for the first time since 1988, following a collapse in prices for oil, iron ore, coal and other raw materials.

The world’s biggest diversified miner reported a net loss of $5.67 billion for the first half of the 2016 financial year, its first loss in more than 16 years, and cut its interim dividend to 16c. Analysts had expected a dividend of 31c.

BHP also ditched its progressive dividend policy, which held that it would pay a steady or higher dividend at each half-year result, to protect its solid A credit rating, the highest in the decimated mining sector.

"Slower growth in China and the disruption of Opec (the Organisation of the Petroleum Exporting Countries) have resulted in lower prices than expected," BHP CEO Andrew Mackenzie said in a statement.

"Our new dividend policy and transparent capital allocation framework are part of a broader strategy to help BHP Billiton manage volatility," he said.

Underlying attributable profit plunged to $412m from $4.89bn a year earlier, missing analysts’ forecasts for about $585m, as commodities prices plummeted to multiyear lows.

Standard & Poor’s cut BHP’s credit rating to A from A+ this month and warned it might downgrade the rating further if the company failed to take more steps to preserve cash and review its dividend policy.

"I can’t see (the ratings agencies) downgrading. They probably would have if the commodity outlook was still poor, but I think the outlook is starting to turn in BHP’s favour," Fat Prophets mining analyst David Lennox said.

BHP cautioned that it expected a prolonged period of weaker prices and higher volatility, and announced a simplified company operating model.

The miner also faces hefty costs from a dam disaster in Brazil at its Samarco joint venture with Vale, which killed 17 people in that country’s worst environmental disaster.

It took an after tax charge of $858m relating to the disaster.

On Monday, Brazilian prosecutors said a judge had blocked 500-million reais ($127m) of Samarco assets to guarantee the clean-up and repair of Barra Longa, the town hit by the deadly flood caused by the burst tailings dam in November.

As well as the asset freeze, the judge approved a 500,000 reais daily fine if the companies do not present a plan within 30 days to fix the damage caused. The repair work must be completed within six months.

The decision was first reported by newspaper O Globo earlier this month but only became public on Monday.

Reuters