BHP CEO Andrew Mackenzie
Photo by: Bloomberg
PERTH (miningweekly.com) – Diversified miner BHP Billiton has identified a number of growth initiatives to pursue while maintaining its focus on capital discipline.
CEO Andrew Mackenzie told shareholders at the company’s annual general meeting, in Perth, that capital discipline and foresight were critical components of increased competitiveness and shareholder value.
“We will only invest to grow the right opportunities at the right time. In the near term, we will address bottlenecks in a capital-efficient manner and unlock high-value, super high returns and additional production.”
Mackenzie said that some of these initiatives would include a move to the higher grade Southern Mining area at the Olympic Dam operation, in South Australia, which would deliver extra volume at low capital costs.
In Western Australia, productivity at the iron-ore division would increase the efficiency of already-installed infrastructure and deliver production of 290-million tonnes a year, while the Caval Ridge coal mine, in Queensland, would be outfitted with a new mining fleet to expand production of metallurgical coal as market conditions improved.
Mackenzie noted that beyond these initiatives, BHP also had the financial strength to invest in a range of medium-term, high-value potential growth projects, such as the development of the hypogene resource at the Spence copper mine, in Chile, which would deliver 200 000 t/y of additional copper production, and would increase the mine life by more than 50 years.
A low-risk underground expansion of the Olympic Dam project would also secure over 450 000 t/y of copper production, while the Mad Dog Phase 2 development, in the US Gulf of Mexico, had been tagged as one of the largest oil reservoirs in the gulf.
“These possible growth opportunities have security of tenure that allows us to pursue them only when the time is right,” Mackenzie said.
“In addition, we’ll continue to invest in new technology to further boost safety, productivity and returns, progress our longer term growth prospects, explore globally and remain alert to value adding acquisitions for copper and offshore oil.”
BHP had previously announced a cut-back on spending, as part of its efforts to deal with tough market conditions, which included global tensions, falling commodity prices and the challenge of climate change.
Capital and exploration expenditure decreased by 24% to $11-billion in the 2015 financial year, and BHP was targeting further reductions in 2016, with capital and exploration spend to decline to $8.5-billion in 2016 and then to $7-billion in 2017.