• Caught in the debt trap?

    Help us help you by taking our second annual Debt survey and you could win R3 000.

  • Rich man, poor man

    Culture change from below is the only way to overcome poverty, says Leopold Scholtz.

  • Tech bubble talk

    After the tech euphoria of 2013, the fast-moving sector has hit a speed bump.

Data provided by McGregor BFA
All data is delayed
Loading...
See More

Billiton's accounting hiding losses

Aug 21 2013 14:27 Fin24

(Shutterstock)

Company Data

BHP BILLITON PLC [JSE:BIL]

Last traded 343.22
Change 2.22
% Change 0.01
Cumulative volume 1023907
Market cap 733.18bn

Last Updated: 24/04/2014 at 04:29. Prices are delayed by 15 minutes. Source: McGregor BFA

Related Articles

Eskom turns to Billiton to meet demand

New BHP boss shakes up top jobs

BHP affirms targets despite weather

Eskom's Billiton losses already R10.7bn

BHP: Eskom must honour power deals

New BHP boss takes $150 000 pay cut

 
Johannesburg - BHP Billiton [JSE:BIL] has probably changed the format of its financial reporting to hide the huge losses made by its controversial aluminium smelters in Richards Bay and Maputo, reported Sake24.

Billiton announced its results for the year ended June 2013 on Tuesday.

The results of its alunimium operations, its nickel mining operations in Australia and its manganese operations, were combined this time.

The latter two divisions had both made profits during the previous financial year.

The aluminium division of Billiton has been buying huge amounts of electricity from Eskom since 1995 without any price increase.

In June 2013 two Billiton energy-gobbling aluminium smelters were even temporarily turned off by Eskom one evening, because demand for electricity exceeded availability.

In 2012 Billiton's aluminium division has made a loss of about R2.4bn at the exchange rate when it was reported.

Together, however, the three divisions show underlying earnings before tax and interest (EBIT) of $164m.

The stronger US dollar in the second half of the financial year and a slight increase of 2% in aluminium production probably eased the losses somewhat.

Marius Kloppers, former CEO of BHP Billiton, said in February that the marginal cost of aluminium production will be higher than its price until at least 2018.

Although the demand for aluminium is increasing sharply, new production capacity increases even faster, according to Kloppers.

That is mainly due to electricity in certain provinces in China being very cheap and new plants being built very quickly to meet the demand.

An Eskom/Billiton power deal came into the spotlight after Fin24’s sister publication Sake24 won a lengthy legal battle in March 2013 that compelled the global mining giant to make public the prices it pays Eskom for electricity.

It emerged that Eskom sells 9% of its electricity to Billiton’s two aluminium smelters at less than one-fifth of the tariff paid by other consumers.

The preferential tariffs for the two smelters, Hillside in Richards Bay and Mozal in Maputo, enable the two loss-making smelters to be sustained while the rest of the country’s consumers, both household and industrial, pay much higher electricity prices.

The investigation which Nersa is doing into the difference in tariffs, was supposed to lead to a public meeting in May. It now looks like it will probably not happen before November.

Billiton is apparently objecting to the publication of certain information needed by Nersa to hold such a public meeting.

- Fin24

Follow Fin24 on Twitter, Facebook, Google+ and Pinterest.

nersa  |  bhp billiton  |  aluminium  |  mining
NEXT ON FIN24X

 
 
 

Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
1 comment
Add your comment
Comment 0 characters remaining
 

Company Snapshot

We're Talking About: Small Business

Standard Bank is looking for 12 entrepreneurs to participate in a 10-part TV series. They could win a R1m investment into their dream.
 
 

Fewer high-risk election areas - Mthethwa

There are fewer high-risk election areas this year compared to past elections, Police Minister Nathi Mthethwa has said while visiting Manenberg in Cape Town.

 
 

Latest elections multimedia

Watch what happened when we blindfolded Helen Zille and asked her to eat random things
13 days to elections - news you need to know
11 Julius Malema quotes you'll never forget
DA won't get 30% - Zille

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...
Loading...