BHP committed to delivering exceptional returns from installed capacity, Iron Ore President says

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Speaking at the 18th annual edition of the Global Iron Ore and Steel Forecast Conference in Perth, WA, BHP Billiton Iron Ore President Jimmy Wilson reaffirmed the company’s commitment to safely maximising returns on installed capacity at its Western Australia Iron Ore business (WAIO).

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During his presentation, Mr Wilson especially highlighted the exceptional returns from the Company’s productivity agenda.

“The effectiveness of our approach is validated by our robust financial and operating results despite the challenging market conditions,” he said.

“For the first half of this financial year the team has delivered a solid underlying EBIT margin of 49% and a return on assets of 34%.”

Mr Wilson also reiterated that WAIO was on track to achieve unit cash costs of less than US$20 per tonne through a relentless pursuit of equipment availability and utilisation, efficient procurement and supply management and capital and workforce productivity.

“Not only is our concentrated resource position a competitive advantage, but the quality and high-grade characteristics of our orebodies translates into premium products in the market. The majority are high Fe Brockman and Marra Mamba ores, with low impurities and a high proportion of lump, around which we optimise our mine plans to maximise our profit margin,” Mr Wilson said, highlighting the company’s strong and differentiated position in the Pilbara.

“We can deliver high-quality product that our customers value, through existing hub infrastructure, at a low operating cost. Our footprint also means that we won’t need to invest in new mining hubs to sustain current operations for decades.”

He said BHP Billiton had also anticipated the increasing supply of seaborne iron ore, approving the last of its major capital investments in its Pilbara infrastructure in 2011.

“Over the past decade, BHP Billiton made a US$25 billion capital investment in infrastructure and equipment in our WAIO operations. Through our disciplined program of investment, we were able to deliver valuable tonnes to market and maintain our share of supply. We have no major projects in execution and our growth pathway will be achieved by continuing to make our existing infrastructure more productive,” he said.

“With this strategy we are maintaining Australia’s competitive position in the global market and providing the revenue, royalties, employment and innovation that is so important for this country’s future.”

According to the company’s news release, WAIO achieved record production of 124 million tonnes in the first half and is on track to deliver 245 million tonnes in the 2015 financial year.