Worth it at any price?, page-22

AnDy62. The resource party isnt over for BHP. The Brazil disaster will perhaps ruin the party for a while but the money making party goes on.

Iron ore costs them less than $30 per ton and they sell it for $50 at the bottom of the cycle.

Coal similarly - BHP assets make decent returns in the bottom of the price cycle.

Oil - Mixed bag. BHP Petrohawk assets tight oil would be losing money with oil price sub $60. But they can avoid exploration and recompletion cost from here till price improves. It will improve because supply will gradually deplete from existing wells and (by late 2016) not meet demand with globally 60%+ of drill rigs decomissioned because of the low commodity price. Its going to be a massive rebound when that baby turns.

Copper - BHP fantastic assets making profit at low point in cycle. Global supply defecit by 2018 forecast due to lack of new mines and declining grades in proposed new mines.

They may be a price taker but unless civilisation collapses BHP will be the last supplier to turn a loss on their mining commodities. Oil will bounce by late 2016 and will see healthy profit longer term with short term pain in this current part of the cycle.

The other factor driving short term pain for BHP is the Brazil tailings disaster - at the end of the day it will cost them. I'm out for the short term (sell sentiment) because the Brazil disaster has too many unknowns. If price drops below $18 I will go all in again. Long term BHP is a good thing.