There's one big question facing BHP Billiton (BHP 2.42%) as it gets set to announce earnings on Feb. 23: How bad is it? But there's more to that question than meets the eye. Here are the things you'll want to be watching.

BHP Billiton logo. Source: BHP Billiton.

The headliner
Although not the driving force behind the BHP's business, one of the big question marks right now is the Samarco mine in Brazil. This is a 50/50 joint venture with Vale (VALE 2.61%) that has become a massive problem after a dam containing mining waste ruptured. Lives were lost, towns were destroyed, and everyone is looking for someone to point a finger at.

So far Vale and BHP have maintained that, while they jointly owned the mine, it is a separate company and, thus, they shouldn't be held responsible. Brazil doesn't see it that way, of course, and is planning to hit both companies up for damages, with a court recently freezing assets of BHP and Vale located within Brazil. Brazil is currently looking for around $5 billion in compensation, but that sounds more like a starting point than the ending point for this disaster.

So you'll want to pay close attention to the update here. However, BHP is likely to say as little as possible in its press release and formal comments, so you'll probably need to listen in on the analyst Q&A to get a true handle on this one. That said, this isn't a problem that's likely drive BHP into bankruptcy or anything close, but it is a headline event that could change investor sentiment.

The dividend?
And that brings up the other big issue -- the dividend. So far, BHP has stood behind its current payment and the idea of a strong and progressive dividend over time. That remained true even as the company's core commodity markets faltered. But after the Samarco disaster, that dedication to the dividend has appeared to waver.

BHP's yield at roughly 11% or so is a clear indication that investors are concerned. Yes, BHP is one of the world's best-run miners. Yes, it has years and years of low-cost iron ore, copper, oil, and metallurgical coal backing its future prospects. But the current commodity downturn has been steep and taken a massive toll on results. For example, in fiscal 2015, which ended last June, revenues were down 21% year over year and earnings were down a whopping 86%.

It would have been hard enough for the miner to hold the dividend line with those results, with additional debt likely to come into play to support the payout. But add the potential for billions of dollars in costs related to Samarco, and the prudent thing to do would be to cut the disbursement. Get ready, because this news could be another headliner in the upcoming release.

Big 'ol BHP truck. Source: BHP Billiton.

What about the business?
Which brings up the core of BHP's future -- its mining operations. Indeed, the headlines will likely be filled with Samarco and dividend news, leaving updates on the ongoing business lacking. So if you are watching BHP, don't lose sight of the core. The question, however, will still be: How bad is it?

The top and bottom lines took a huge tumble last fiscal year. And since BHP only reports earnings twice annually, this update is the last one you'll get before full-year results come out. So far, the commodity market has continued to slump. That suggests there won't be too much good news for investors.

What you'll want to listen for are updates on how cost cutting efforts are going, if production continues to increase, and how sales are shaping up in China, a key end market. The mining majors have all been increasing production despite falling prices, with the goal of keeping costs as low as possible in preparation for the next upturn. However, that's putting even more downward pressure on prices today.

And China, a major driver of global demand for commodities, continues to slow, which is another black mark for demand. It's a complex brew, to be sure, but you'll want to get a feel for what the near-term picture is likely to hold and how that plays against BHP's view of the long-term future. Essentially, can you, and BHP, stomach the pain today for the potential gain down the line?

In the end, the news out of BHP when it announces earnings is probably going to be bad all around. There's not much the company can do about that, even though it is working hard to adjust to the current market environment. Which is why you'll want to ask: How bad is it? Sadly, that's a question to apply universally this time around.