Sydney, Australia — 02 August 2012 – The world’s biggest mining company BHP Billiton says it will focus on cutting costs, three weeks before it is expected to report its first drop in annual profits since the 2008 global financial crisis due to weakening commodity demand.
“Against a backdrop of increasing costs and falling commodity prices, we continue to focus on reducing our overheads, operating costs and non-essential expenditures to ensure our assets are well positioned on their relative cost curves,” said BHP spokeswoman Fiona Martin. “This includes reviewing our overhead costs and the sequencing of our major projects.”
Reuters reports that these comments come amid mounting expectations that BHP will postpone one or more mega-projects it has proposed until economic outlooks in Europe and China improve.
Following a meeting yesterday with Colin Barnett, premier of Western Australia, where BHP this year shipped 159Mt of iron ore and is spending billions of dollars on expansion work, BHP chief executive Marius Kloppers told an Australian newspaper the company had not significantly changed its cautious view on global growth, nor its outlook for commodities, since last year.
“What we really look at is, where does the long-term demand take us? Our view on that hasn’t really changed. There has been no real change in that long-term picture," he re-iterated.
Kloppers said BHP had about US$30 billion of growth projects in the execution phase, while Martin added that expansion work to boost iron ore production by 5% in fiscal 2013 would continue as planned.
BHP has yet to give the green light to the development of its Outer Harbour project in Western Australia, one of three huge projects in the US$80 billion pipeline that BHP has slowed.
The company is tipped to report on the 22nd of August about a 22% decline in underlying earnings for fiscal 2012 to US$16.990 billion, based on analysts’ estimates.
Source: Reuters Africa. For more information, click here.