BHP Plans to Cut Coal Costs Further, Signals Positive Outlook
June 20 2016 - 7:37PM
Dow Jones News
By Rhiannon Hoyle
SYDNEY--BHP Billiton Ltd. (BHP.AU) outlined plans to cut costs
further in its coal business, although it was optimistic about
future demand for the commodity and said all of its mines are
generating positive cash flow despite a prolonged market
downturn.
The miner said it aims to reduce coal-output costs by 17% in the
year through June 2017 compared to two years earlier, and it
expects a productivity drive to reduce spending by US$600 million
by mid-2017, on top of the US$3 billion of savings recorded since
2012.
BHP slashed costs in its coal business, including cutting jobs
and suspending unprofitable mines, as prices of the commodity
tumbled to multiyear lows because of a global oversupply.
"Even in today's difficult environment, all of our operations
remain cash positive," said Mike Henry, BHP's head of Australian
mining operations.
On Tuesday, BHP signaled a positive outlook for both coking
coal, used in steelmaking, and thermal coal, used to generate
electricity.
"The developing world needs steel, steel needs coking coal,"
said Mr. Henry. "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."
BHP forecast absolute demand for thermal coal to increase by
10-15% by the mid-2020s.
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com
(END) Dow Jones Newswires
June 20, 2016 19:22 ET (23:22 GMT)
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