JOHANNESBURG (miningweekly.com) – Mining giant BHP Billiton expects its copper output to grow to about 1.7-million tonnes at “very low cost” in 2017.

The group’s copper president Daniel Malchuk on Tuesday said the release of latent capacity across its portfolio would help boost its copper output, with this strong recovery to be supported by differentiated water and power solutions at the group’s operations in Chile, which would provide BHP with a significant competitive advantage.

BHP was also targeting copper unit costs of $1.08/lb in the 2017 financial year.

Malchuk said that, while near-term oversupply was weighing on current prices, attractive long-term fundamentals continued to support BHP’s positive outlook.

“We see a number of factors creating the conditions for a significant supply deficit by the end of the decade. Grade decline, falling investment across the sector, the lack of greenfield projects and challenges accessing sustainable power and water are all likely to constrain industry supply.

“Meanwhile, we expect robust demand from China and non-Organisation for Economic Cooperation and Development countries to add to the deficit,” he stated.

Malchuk added that BHP Billiton’s copper portfolio comprised large, long-life assets that were competitively positioned on the cost curve. “We have the industry’s largest copper resource and our business will gain momentum over the next two years, with lower costs and higher production across our major assets as we safely improve productivity.”

He asserted that no major investment would be required to sustain an average 1.2-million tonnes a year of production capacity at the Escondida operation for the decade from the 2016 financial year.

Unit costs at the Olympic Dam asset, in South Australia, were, meanwhile, expected to fall 48% by the end of the 2017 financial year to $1/lb, repositioning the asset at the low end of the cost curve.

Over the same period, unit costs at the Spence mine, in Chile, were expected to fall 10% to $0.87/lb, while low-cost debottlenecking projects would release latent capacity, supporting sustainable production of 200 000 t/y at both Olympic Dam and Spence from the 2016 financial year.

“We are also pursuing further growth opportunities which offer attractive returns. The Spence growth option has advanced to the feasibility stage with the potential for first production in the 2020 financial year.

“And we continue to create staged optionality for substantial long-term growth at Olympic Dam. These opportunities will enable us to bring on production at a time that coincides with an expected price recovery,” Malchuk said.