SMM Online report: 5 Before the new year, BHP has invested billions of dollars to acquire land in the United States that holds shale oil and gas reserves. Just like the mines it owns in Australia’s remote outback.

Thereafter, the miner It also invests in mineral products such as coal and copper, leading the development of the mining industry. Facing China’s increasingly robust commodity market, they have reaped substantial benefits.

The reason for industrial diversification is quite simple: once the price of a particular commodity falls in a given year, the company’s overall profitability won’t be significantly affected.

No one could have imagined that crude oil and base metals would simultaneously plunge sharply, hitting multi-year lows.

Tuesday, BHP cuts 74% the dividend payout, following the company’s earlier forecast of a loss for the first half of the year. 56.7 hundred million dollars. Since then 2011 Since mid-year, BHP's market capitalization has already fallen. 3/4 , approximately 600 hundred million dollars.

Chairman Mackenzie (Andrew Mackenzie) It is now believed that by scaling down, the company can regroup and regain its footing. Last year, The company has spun off its businesses in niche commodities such as manganese and alumina.

McKenzie told reporters on Tuesday: The divested assets have exceeded 50%， We will focus on operating our core commodity and asset businesses.

It’s not just BHP Billiton that’s feeling the pain.

Last year, The share price of Anglo American Group has fallen. 60%。 Company 30% Its pre-tax income comes from iron ore and manganese ore. 21% From coal, 26% From diamonds, 22% From platinum and copper.

Currently, Anglo American is shutting down or selling its coal and iron ore assets, focusing instead on its businesses in diamonds, platinum, and copper.

The share price of Glencore, a company that operates in a variety of metals businesses, is nearly plummeting to the floor. Its ability to repay its multi-billion-dollar loans has attracted widespread market attention. Meanwhile, BHP’s biggest competitor is... Rio Tinto Group is also selling off a large number of coal assets.

Patnayak, Senior Lecturer at the University of Sydney Business School (Chinmay Pattnaik) said: “Many companies believe that,” If you can't become an industry leader, it's better to just exit the market. If you lack competitiveness in the industry, it’s a wise choice to make way for more specialized companies.

The largest U.S. mining company Freeport-McMoRan Inc Long-term operation of copper mines, 2012 Acquired two oil companies last year. McMoRan Exploration Co. and Plains Exploration & Production Co. , with a total value reaching 90 hundreds of millions of dollars, and the company’s debt has reached 200 hundred million dollars. 2015 This year, oil prices plummeted, causing the company to record impairment charges on its books. 121 hundred million dollars.

Now Freeport The strategy is to sell oil and gas assets or establish joint ventures to co-manage the oil and gas industry. Copper mining has relatively low operating costs and a long resource reserve lifespan, so the company is focusing its primary efforts on copper mines.

BHP’s reversal of fortune may be the most shocking event in the industry. Over the years, the company has successfully expanded aggressively, trading in a wide variety of commodities and bringing broad benefits to investors. For a long time, it has been engaging in premium-price trading with its competitor Rio Tinto.

Analysts say that, namely... As prices of different commodities fluctuate, the company’s earnings and potential returns for shareholders are expected to continue rising. As a result, BHP has become renowned within the industry.

Former CEO of the company, Kraubus (Marius Kloppers) At 2012 At the annual forum, it was stated: “ 10 For years, BHP has been striving to diversify its company’s portfolio.

BHP's bet on U.S. shale oil is the most extreme example. The company... 2011 Annual expenditure 200 Billions of dollars have been invested in U.S. natural gas assets, making it the company with the largest oil production capacity among non-professional oil companies.

2013 Yearly resignation Kloppers He said, “The most fundamental core of the company’s business diversification is that not only have we diversified our ore business, but we also have an oil and gas business—something our competitors don’t have.”

At that time, BHP believed that oil prices and ore prices would not rise and fall together—that a strengthening oil price could offset a weakening ore price.

That logic was only recently declared invalid. Last year, the prices of iron ore and crude oil nearly halved. Other commodities, such as coal and copper, also performed poorly.

On Tuesday, the miner made its... 49 The company recorded a book impairment of hundreds of millions of dollars in its energy business—a single impairment that set a new company record. BHP stated that, due to anticipated lower prices, the company’s development plans will need to be revised.

Mining executives expect that, Industrial diversification will continue to be widely promoted, and companies will reduce their reliance on commodity assets.

The challenge they face is how to exit the sluggish market as quickly as possible. According to the consulting firm... EY data shows that the volume of mineral product transactions has been continuously... 5 Year-on-year decline. The current situation is... Severe oversupply has put downward pressure on commodity prices.

The agency’s recent report stated: “Once prices plummet and the market slumps, buyers will become fewer, transaction risks will soar, and it will become difficult to sell goods.”