BHP, Rio Seen Curbing $19 Billion of Buybacks on Iron-Ore Plunge

BHP Billiton Ltd. and Rio Tinto Group., the world’s two biggest mining companies, may need to rein in the size of widely anticipated share buybacks if this year’s 30 percent slump in iron ore deepens in the second half.

“The most pertinent question is whether Rio will be bold enough to proceed with a much-mooted share buyback in early 2015 if iron ore ends 2014 on a weak note,” Macquarie analyst Jeff Largey wrote in a June 24 report. The bank estimates BHP could buy back 5 percent of its market value and Rio 10 percent, about $19 billion of shares at yesterday’s prices.