Mining and Heavy Industries

Mackenzie vows to grow BHP by 70%

BHP iron ore train. Photo: BHP Billiton

BHP Billiton boss Andrew Mackenzie says the mining juggernaut can grow by 70%, even without a significant recovery in commodity prices.

Mackenzie spoke to the Bank of America Merrill Lynch Conference in Miami this week.

He presented what he called BHP’s “roadmap” to substantial growth, which is based on foundations of productivity, incremental volume growth, a large resource base, a large growth portfolio, a counter-cyclical acceleration of drilling programs, and technological investment.

“Although we remain confident in the long term outlook for commodities, we are not waiting for prices to recover,” Mackenzie said.

“We have everything we need in our portfolio right now to significantly increase the value of the company.”

Productivity improvements will lead to US$3.6 billion in gains by the end of the 2016/17 financial year, he said.

“Unit costs in our major businesses are expected to fall to almost half the levels experienced five years ago. We are maintaining momentum with more to come.”

Further BHP investment will add over 1 million tonnes of copper equivalent capacity at a total capital cost of less than US$1.5 billion, Mackenzie said.

“This is equivalnent to more than 10% of BHP Billiton’s total current production,” he continued.

“We will also maximise the value of our high quality shale assets in a disciplined manner as prices recover.”

Medium-term growth will come from oil and copper, he said, with investment decisions on the Mad Dog 2 and Spence projects expected within 18 months.

“We are increasing our exploration activity to take advantage of falling costs as others pull back,” he added. “We have embarked upon one of our most significant oil exploration programs, accelerating activity in our three priority basins.”

BHP Billiton was up 3% on Wednesday morning to $18.39 per share on the ASX. The miner’s share price has been heavily impacted by significant declines in key commodity prices over the last 18 months.

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