Why the BHP Billiton Limited share price could fall below $18

The story is getting worse and worse for BHP Billiton Limited (ASX: BHP) shareholders.

What was once considered by many as being one of Australia’s safest companies is now threatening to fall below $18 a share. BHP Billiton’s share price is down 2.6% today and nearly 34% since the beginning of the year, while the shares are trading at their lowest price since 2008.

Source: ASX website

Source: ASX website

Further falls are possible

Today’s fall can be attributed to further declines in commodity prices last week, together with an update from BHP Billiton regarding the recent disaster at Samarco, Brazil.

It said the Brazilian Federal Government and certain State governments want to commence legal proceedings against Samarco, Vale and BHP Billiton (Vale and BHP Billiton are the joint owners of Samarco) to the tune of BRL 20 billion (approximately US$5.2 billion) for environmental recovery and compensation.

With tighter profits and cash flows, this could certainly be the event that leads to BHP Billiton scrapping its progressive dividend policy.

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Motley Fool contributor Ryan Newman has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. You can follow Ryan on Twitter @ASXvalueinvest.

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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