Andrew Mackenzie, ’s chief executive, reflected on a year of and financial turmoil as he revealed a record annual loss of $6.4bn by the world’s most valuable mining company.

In Brazil, 19 people were killed in November when a dam gave way at an iron ore mine jointly owned by BHP. Mr Mackenzie acknowledges he and the company were still coming to terms with the disaster at the Samarco venture — which had led to “huge suffering . . . we are doing the best we can to right those wrongs”.

On the commodity markets, BHP — like other miners — was hit by plummeting prices, particularly in the last months of 2015. Underlying attributable profit at the Anglo-Australian group fell by more than 80 per cent to just $1.2bn.

This is a far cry from the $19bn of equivalent profit recorded by BHP in 2011 during the boom in the commodity cycle, and before to the top job.

But in spite of the Samarco disaster and the steep annual loss — as well as BHP’s first dividend cut since its 2000 merger with Billiton — the Scot who has led the mining group since 2013 insisted there were grounds for optimism.

The $6.4bn loss would “get plenty of coverage and we are very disappointed in it,” says Mr Mackenzie.

“But the underlying performance of the business is strong and getting stronger,” he insists.

Investors seemed to agree, sending shares in BHP 3.5 per cent higher as the miner spelt out its view that were no longer in free fall and that its free cash flows could more than double this year.

The $7.7bn of exceptional charges that pushed BHP to its largest ever loss were caused by two main problems. One was Samarco, where BHP booked $2.2bn of costs connected with the uncertainty over when mining could restart. Legal challenges could still hamper BHP’s efforts to put the disaster behind it as it hoped to do when agreeing a clean-up settlement with the Brazil government this year.

The larger problem in financial terms was a $4.9bn post-tax impairment of , part of an oil business that sets BHP apart from many of its mining peers.

Under Mr Kloppers, its previous chief executive, BHP spent more than $20bn on shale acquisitions in 2012 when crude was trading above $100 a barrel. It subsequently ploughed more than $16bn into developing the fields.

After a savage market downturn, crude oil trades for less than $50 a barrel and BHP’s impairment charges reflect the lower price environment and a much reduced drilling programme. In total, BHP has written down the value of its US onshore assets by $13.4bn.

Mr Mackenzie, a former BP executive, continues to back the business in part because of its flexibility. Onshore drilling rigs can be deployed much more quickly than in deepwater oil and gas production.

“What [shale] allows you to do is allow you to rapidly profit from volatility in price,” says Mr Mackenzie. “We don’t really have that flexibility in anything else we do.”

BHP is convinced that oil offers some of the best prospects of any of the raw materials it produces because of its view that industry-wide investment cuts will crimp future supplies.

“Because of the failure to invest and the natural decline rate in oil . . . the chances of the market coming back into balance and boosting the prices probably are higher than some of our other commodities,” he says.

With prices of all its commodities — the others are iron ore, copper and coal — so uncertain, BHP and other miners have been trying to cut costs.

Unit production costs came down 16 per cent during the last financial year and are expected to fall a further 12 per cent this year. That, and the pause in commodity price declines, “gives us the chance to open up pretty decent margins”, Mr Mackenzie says.

After generating free cash flow of $3.4bn last year, BHP says it would be on track for $7bn at current commodity prices and exchange rates. This would give more scope for higher dividends, debt repayment or more investment: this year will probably mark a trough for BHP’s capital spending at $5.4bn, just a quarter of the level five years earlier.

But Mr Mackenzie rules out the sort of acquisition spree that landed BHP with this year’s shale impairments.

Growth through acquisition “is not part of the plan nor can it be . . . there are always other uses of our cash that offer higher returns,” says Mr Mackenzie. “Given the competition we have for capital there are very few deals that can compete.”