BHP BillitonBHP Billiton has just announced plans to focus on its 12 large core assets which already produce 96% of its operating profit. They will reduce the operation from “30 operated assets of varying sizes across a broader range of commodities in order to bring senior management closer to the operations, reduce duplication and cut functional costs to maximise shareholder value” says Mr Andrew Mckenzie CEO of the company.

This also forms part of the company’s strategy to separate its South African businesses into a new entity through a demerger. Key appointments have already been made for the new company.

BHP Billiton will deliver a “step change improvement in performance” says Mckenzie, as they are now able to define the benefits in greater detail. By the end of 2017, they will be able to show a US$500million increase of productivity-led gains within the core portfolio reaching US4billion over the period. This includes a minimum reduction of $2.6 billion cash costs per anum.

Mr Mackenzie adds: “Our commitment to a solid A-credit rating and a progressive dividend policy has underpinned sector-leading shareholder returns. From this strong foundation we will strike the right balance between investment in high return opportunities and returning cash to shareholders.

“Improved capital productivity gives us additional flexibility. We are reducing the cost of bringing on new production and can lower our investment without slowing volume growth. As a result, we will reduce planned capital and exploration expenditure from $14.8 billion to$14.2 billion in the 2015 financial year and expect to invest $13 billion in the 2016 financial year.”