BHP’s diamond exploration proves heavy on revenues

Scaling diamond prices have recorded an 8.5% increase in diamond revenues at BHP Billiton for the fiscal 2007-08, and the revenues stood at $969 million. Although, the company has had to incur high diamond exploration costs which have reduced its diamond and specialty unit’s underlying EBIT (earnings before interest and taxation) by 4.1 percent to $189 million. The unfavorable exchange rate movements of the Canadian against the U.S. dollar, have also pressurised the revenue increase.

The company increased its exploration spends for diamonds in Angola, potash in Canada and for titanium minerals in Mozambique, which are all part of the diamond and specialty group. Other investments into mining included completing its Koala mine project in Canada at a capital cost of $176 million, for which it had budgeted $200 million.

Although diamond operations have been a bit heavy on the company’s financial register, the overall group revenues increased by 25.3 percent to $59.473 billion, and EBIT by 21 percent to $24.28 billion. The company’s petroleum, base metals, iron ore, manganese and energy coal customer sector units, each generated record EBIT, promoted by an increased industrialisation and hence increased demand by the Chinese market. The company’s attributable profits increased by 14.7 percent to $15.39 billion.