BHP Billiton outlines plans to slash coal costs by $US600m

Image credit:

BHP Billiton will cut its coal costs by approximately y US$600 million by the end of the 2017 financial year as it seeks to increase returns from the business amid challenging market conditions.

Image credit:
Image credit:

The company, which already achieved $US3 billion in “productivity gains” since 2012, told investors at a Coal briefing that it was looking to further increase the competitiveness of its coal operations – both in terms of costs and volumes.

“Rather than waiting for higher prices, we have been deliberate in shaping a quality, focused portfolio that allows us to deliver value in challenging market conditions and positions us well for an expected longer-term improvement in coal market fundamentals,” said President Operations Minerals Australia, Mike Henry.

“While cost compression has been evident across the industry, we continue to work hard under our new operating model to improve our performance. Even in today’s difficult environment, all of our operations remain cash positive.”

He said BHP Billiton can also grow its Coal business by releasing low-cost, latent capacity as well as by exercising high quality growth options if market conditions call for it.

“The developing world needs steel, steel needs coking coal, and we have the strongest resource position in the seaborne market,” Mr Henry added.

“Against the backdrop of greater uncertainty in the outlook for thermal coal, we are confident that base demand in emerging economies will remain resilient for decades to come and our higher quality coals position us well in an increasingly carbon constrained world.”