BHP Billiton Ltd./Plc., the world's biggest mining house, should post record second-half profits on strong sales of industrial minerals such as copper, iron ore, coal and petroleum products.

Consensus tallies point to January-June net profit close to $7.4 billion, pushing up full-year profit by 30 percent to $13.6 billion on sales of around $47 billion.

The full-year profit figure is slightly above Goldman Sachs JBWere analyst Neil Goodwill's $13.5 billion.

BHP had a fiscal 2006 profit of $10.5 billion.

A sharp lift in half-year earnings would outgun rival Rio Tinto Ltd./Plc., which saw its half-year profit slide 6 percent on higher taxes and operating costs.

Other peers, including CVRD, Xstrata and Anglo American have had hefty profit gains.

Goodwill said outgoing BHP Chief Executive Chip Goodyear could give more details on the company's plans to disperse more of the $10 billion in paybacks promised to shareholders.

Clearly they need to finish that one and they may make some announcement on how to do that, he said.

COPPER DIP

Consensus forecasts provided by BHP ahead of the results on August 22 put underlying full-year earnings before interest, tax, depreciation and amortization (EBITDA), sometimes seen as a better indicator of earnings power, at $22.6 billion.

Copper prices dipped mid-year but recovered to finish above $7,000 a tonne. Aluminum rarely traded below $2,400 a tonne.

Analysts tip BHP's copper production -- at 1 million tonnes a year second only to Chile's Codelco -- to account for a third of earnings before interest and tax (EBIT), despite below-par performances from the Olympic Dam operation in Australia and Cerro Colorado in Chile.

Iron ore operations saw a 9.5 percent rise in sales prices from April 1.

Goodyear, who retires in October, may also take the opportunity to allow his successor Marius Kloppers to outline operational strategies.

High on the list, say analysts, is deflating ballooning operating and labor costs as hunger for commodities, led by furious industrial growth in China, taxes infrastructure and labor pools, particularly in its iron ore mines, where earnings before interest, tax and depreciation are seen down more than 4 percent.

The key risks to our target price include the company's ability to work through the bottlenecks in the iron ore operations and delivering planned production in the petroleum division, ABN AMRO said in a report.

Company-wide costs in fiscal 2006 rose by more than $1 billion as BHP churned out as much as it could, and analysts expect even larger overruns in the year ended June 30.

Kloppers has indicated a desire to expand copper and nickel operations in Chile and Colombia respectively.

Profit forecasts take into account BHP's warning of $81 million in costs as it was forced to buy uranium on the spot market to supplement lower production from the Olympic Dam mine.

Offsetting uranium was a hike in earnings before interest and tax slated to reach $108 million, based on provisional pricing for copper.

BHP also continues to wrestle with billions of dollars in cost overruns at its Atlantis oil project in the United States and Ravensthorpe nickel mine in Australia.

There was nothing specific on Ravensthorpe and Atlantis in the production report (issued July 24), so one can assume they are on their revised schedules, said an analyst who asked for anonymity. These two issues alone give Kloppers a full plate.

A revamped timetable by BHP puts Atlantis into production before December.

BHP has also been racing to complete the Ravensthorpe project in time to capture higher-than-average prices being paid for nickel, a key stainless steel alloy, though it may have missed the peak, according to commodities forecasters.

Nickel zoomed to all-time highs above $51,000 a tonne in May, but has since fallen back to around half that level.

By 2009, nickel could sell for less than $20,000 a tonne, according to UBS.

BHP said last November that Ravensthorpe construction costs had increased 64 percent to $2.2 billion, up from an original budget of $1.34 billion. The company has also pushed out the start-up period to the first quarter of calendar 2008.

For now, a raft of annual production records, helped by strong fourth-quarter gains in copper, nickel and coal were driving profits, analysts said.

($1=A$1.22

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