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27-10-2014, 08:52 PM
BHP reveals new cost-cutting details
DOW JONES NEWSWIRES WITH A STAFF REPORTER OCTOBER 27, 2014 9:30PM
Mining titan BHP Billiton Ltd on Monday unveiled further details about how it plans to meet its cost-reduction and productivity improvement targets.
The Anglo-Australian miner, the world's largest by market capitalisation, is in the process of spinning off part of its business, leaving it with a higher quality core of 19 assets. This core portfolio of assets is expected to grow output by 23 per cent in copper equivalent terms over the next two years to the end of the financial year ending June 30, 2015.
This compares with the company's previous guidance that it would grow output by 16 per cent over the same period, including output from the assets that will now be spun off.
"As our capital efficiency improves we will be able to create more value for less investment. We believe we can significantly reduce annual capital expenditure relative to our current plans while maintaining our growth trajectory," BHP chief executive Andrew MacKenzie said in a statement related to the company's investor day briefing.
BHP expects a minimum $US3.5 billion in annualised productivity gains by the end of the 2017 financial year with more than $US2.3 billion to come from cash cost savings. This should help the company generate an ungeared, post tax, nominal rate of return of over 20 per cent based only on its core portfolio of assets, Mr Mackenzie said.
At its Western Australian iron ore business, BHP expects to deliver a further 25 per cent reduction in unit costs in the medium term. At its majority-owned Escondida mine in Chile, BHP plans to reduce unit costs by another 5 per cent in the 2015 financial year. And at its US onshore petroleum operations, unit costs are expected to decline by 10 per cent in the 2015 financial year. The company also plans to reduce its Queensland coal unit costs in Australia by 10 per cent to below $US90/ton in the 2015 financial year.
Mr Mackenzie also said the company is planning to divest its Fayetteville acreage as it has decided to fully concentrate on the development of its high quality Haynseville gas field. He said, however,"we will only divest the field if it maximises value for shareholders."
DOW JONES NEWSWIRES WITH A STAFF REPORTER OCTOBER 27, 2014 9:30PM
Mining titan BHP Billiton Ltd on Monday unveiled further details about how it plans to meet its cost-reduction and productivity improvement targets.
The Anglo-Australian miner, the world's largest by market capitalisation, is in the process of spinning off part of its business, leaving it with a higher quality core of 19 assets. This core portfolio of assets is expected to grow output by 23 per cent in copper equivalent terms over the next two years to the end of the financial year ending June 30, 2015.
This compares with the company's previous guidance that it would grow output by 16 per cent over the same period, including output from the assets that will now be spun off.
"As our capital efficiency improves we will be able to create more value for less investment. We believe we can significantly reduce annual capital expenditure relative to our current plans while maintaining our growth trajectory," BHP chief executive Andrew MacKenzie said in a statement related to the company's investor day briefing.
BHP expects a minimum $US3.5 billion in annualised productivity gains by the end of the 2017 financial year with more than $US2.3 billion to come from cash cost savings. This should help the company generate an ungeared, post tax, nominal rate of return of over 20 per cent based only on its core portfolio of assets, Mr Mackenzie said.
At its Western Australian iron ore business, BHP expects to deliver a further 25 per cent reduction in unit costs in the medium term. At its majority-owned Escondida mine in Chile, BHP plans to reduce unit costs by another 5 per cent in the 2015 financial year. And at its US onshore petroleum operations, unit costs are expected to decline by 10 per cent in the 2015 financial year. The company also plans to reduce its Queensland coal unit costs in Australia by 10 per cent to below $US90/ton in the 2015 financial year.
Mr Mackenzie also said the company is planning to divest its Fayetteville acreage as it has decided to fully concentrate on the development of its high quality Haynseville gas field. He said, however,"we will only divest the field if it maximises value for shareholders."