BHP Billiton positions to buy, not build

We analyse BHP Billiton's reported half year loss of US$5.7 billion (to the end of 2015) driven by close to US$8 billion in impairments. EBITDA was close to US$6 billion led by iron ore at US$2.8 billion. The company announced a reduction in dividend payments and capital spend to ensure its balance sheet is strong, in order to take advantage of potential M&A opportunities. High quality assets held by financially distressed mining companies are likely to come to the market, and at this low point in the cycle it makes more sense to buy assets, rather than build additional capacity.