PERTH (miningweekly.com) – Diversified miner BHP Billiton has reported a 10% increase in profit for the full year ended June, driven by $2.9-billion productivity-led volume and cost efficiencies.

The miner, which on Tuesday also announced the demerger of its aluminium, coal, manganese, nickel and silver assets into an independent metals and mining company, reported that attributable profit for the full year increased to $13.4-billion as its cost efficiency programme beat the target by 61%, or $1.1-billion.

“In the past 12 months, we have delivered on our commitments. Our operational performance continued to improve, enabling us to exceed production guidance for a number of our core commodities, including iron-ore, metallurgical coal and petroleum liquids,” said CEO Andrew Mackenzie.

He pointed out that the company had embedded more than $6.6-billion of sustainable, annualised productivity-led gains over the last two years.

The miner on Tuesday announced that it was targeting a further $3.5-billion in annualised productivity gains within its core assets by the end of 2017, implementing a demerger that would see the company focus solely on its core assets of iron-ore, petroleum, copper, coal and potash.

The miner’s iron-ore operations in Australia were an illustration of the benefits available to BHP, with Mackenzie pointing to the debottlenecking of the mines and the inner harbor infrastructure that would increase the supply chain capacity to 290-million tonnes a year.

The additional 65-million tonne a year of capacity is likely to have a capital intensity below $50/t with the improvement in productivity and economies of scale also expected to significantly reduce unit costs.

“BHP is becoming a simpler, more productive company and the demerger proposal we have announced today is an important step forward. We plan to create an independent global metals and mining company based on a selection of high-quality aluminium, coal, manganese, nickel and silver assets,” Mackenzie said.

Meanwhile, BHP on Tuesday announced that its earnings before interest, tax, depreciation and amortisation had increased by 6.8% during the year ended June, to $32.3-billion, driven by a 1.9% increase in revenue, which was recorded at $67.2-billion.

The increased revenue, in turn, was driven by the improvements in productivity, which saw BHP report a 9% increase in group production during the financial year, with production records achieved at 12 operations, and for four commodities.

The Western Australian iron-ore business and the Queensland coal business exceeded their production expectations, with both rising by over 20% as more tonnes were delivered from existing infrastructure and growth projects ahead of schedule.

At the Escondida operation, in Chile, an increase in mill throughput and concentrator use have offset copper grade decline. The onshore US petroleum business delivered a 73% increase in production.

Mackenzie noted that BHP was on track and maintained momentum to generate a group production growth of some 16% over the next two years, to the end of 2016.

For 2015, capital and exploration expenditure was also expected to decline to some $14.5-billion, with no more than $14-billion being spent should the proposed demerger be implemented.

“Our investment plans will be optimised within this framework to deliver the best results in terms of net present value, internal rate of return, return on capital employed and operating margin,” Mackenzie said.

At the end of the 2014 financial year, BHP had eight major projects under development with a combined budget of $14.1-billion.