Iron Ore & Coal Out, Oil & Gas In As Focus for BHP Billiton

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Iron ore and coking coal businesses are being relegated to the back burner at BHP Billiton. Chief executive Andrew Mackenzie this week said that the company’s future investments will have an energy focus, meaning the company’s Houston-based oil and gas unit will become increasingly more important, especially after the split of BHP Billiton’s non-core assets.

 “The bigger investment will be energy, and the issue with energy is we need diversification within the energy space because the world hasn’t got a magic or clear pathway through to the energy supply of the future,” Mackenzie shared with The Australian.

“Small growth in steel is off a very high base and by being the lowest-cost supplier of coal and iron ore we continue to have a good future there — perhaps through more productivity opening up higher margins, even by just running current operations well and keeping their capacity.”

As the world’s energy future is up in the air, Mackenzie has said that debates on carbon emissions and nuclear, renewable power and fossil fuels will be necessary.

 “We want BHP Billiton to be well positioned to have options across the energy space and we are wanting to have the skills to make use of what will be a surge in ­demand for energy and where more of our investment will go in the future.”

The company’s focus will still be on its four pillars, which include iron ore and coking coal, as well as oil & gas and copper. Fertiliser potash may be considered a fifth pillar in the coming years, as BHP sees opportunities brought on by rising living standards of growing populations and the increased consumption that comes with it.

Mackenzie also mentioned that the company will be considering copper as an energy commodity due to its high usage in transport, renewables and energy efficient technology.

Information sourced from the Business Spectator.

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