BHP Billiton targets another $US600 million from coal arm by June 2017
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Mining giant BHP Billiton says it is aiming to earn another $US600 million from its coal business by the end of the 2017 financial year as it seeks to improve returns and reduce costs.
BHP expects to boost its coal output by 8 per cent in the three years to June 2018, and cut costs by 16 per cent over the next year.
The company’s coal business has made $US3 billion in productivity gains since 2012 and the company said despite coal prices slumping, all of its operations remain cash positive.
“The developing world needs steel, steel needs coking coal and we have the strongest resource position in the seaborne market,” BHP president of operations, Mike Henry, said.
“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.”
In a presentation released to the ASX, BHP flagged short-term forecasts show markets are expected to remain oversupplied in the near term, with China’s demand for imports likely to fall further as “domestic overcapacity persists”.
However, BHP expects demand to increase by 10 to 15 per cent by the mid-2020s, with low-cost energy coal to be a preferred fuel source in India and South-East Asia.
BHP flagged that its coal portfolio is “resilient in a 2-degree world”, and said the human influence on climate is clear “physical impacts are unavoidable”.
“We believe the world must pursue the twin objectives of limiting climate change and providing access to affordable energy,” the presentation said.
“We do not prioritise one of these over the other, both are essential.”