Perth’s BHP Billiton to up coal production and cut costs

By Enterprise Monkey

Perth-based mining giant BHP Billiton has revealed plans to boost its coal output by eight percent over the next three years while continuing to cut costs.

All of BHP’s operations are currently cash positive, with the company making US $3 billion in productivity gains since 2012 despite a worldwide slump in coal prices.

Over the course of the next year, the world’s top exporter of metallurgic coal plans generate a further US $600 million from coal operations — while also cutting costs by 16 percent.

“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 and our higher quality coals position us well in an increasingly carbon constrained world," said BHP's President of Mineral Australia operations, Mike Henry.

Henry predicts that the coal sector will be made more sustainable given the Chinese government’s plan to reduce some of its coal mining capacity. BHP also anticipates a 10 to 15 percent rise in demand in India and South-East Asia, where low-cost coal will be a sought-after source of energy.  

The company expects to produce 42.5 million tonnes of metallurgical coal in the next year, upping production to 44 million tonnes in 2017 and 46 million tonnes in 2018.

In addition, BHP plans to cut costs at its Queensland coal business by nine percent to $52 a tonne in the next financial year. This contrasts with current coking coal prices which averaged more than $90 a tonne in the June quarter.

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Read the June 2016 issue of Business Review Australia and Asia magazine


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