It comes after the UK investment bank slashed its commodity price forecasts.

BHP’s earnings were downgraded after Investec’s iron ore price forecast was cut by 25% to $US56 per tonne in 2015-16.

EBITDA is forecast to be $24.3 billion this financial year and $20.2 billion in FY16, down from $32.3 billion in FY14.

But Investec was more concerned about South32 as its valuation of the spin-off has been in decline since the demerger was announced.

Investec’s South32 valuation has dropped from $18.6 billion in September 2014 to $14.3 billion in March and $12 billion currently.

“The decline is not, however, altogether out of context with the general fall in BHP Billiton’s share price over the same period, which is down 29% in US dollar terms,” Investec said.

Aside from silver and thermal coal, which were flat, Investec downgraded price forecasts for South32’s other commodities – aluminium, alumina, lead, zinc, nickel, manganese and coking coal.

Applying the new commodity prices means that South32 no longer exhibits earnings growth and current earnings forecasts show a modest decline from FY16 onwards.

“With our latest commodity price deck, our earnings outlook for South32 is now flat at best, with growth now dependant on meaningful cost reductions, commodity price appreciation, or accretive M&A,” Investec said.

Shareholder meetings to approve the demerger are due to take place in Perth and London on May 6.