BHP Says Reviewing Costs, Major Project Timing as Prices Fall
BHP Billiton Ltd. (BHP), the world’s biggest mining company, said it’s studying spending cutbacks across its operations and reviewing its development pipeline of major projects as commodity prices fall.
“Against a backdrop of increasing costs and falling commodity prices, we continue to focus on reducing our overheads, operating costs and non-essential expenditure,” the Melbourne-based company said today in an e-mailed statement. “This includes reviewing our overhead costs and the sequencing of our major projects.”
Miners are reassessing spending plans as commodity prices drop, amid concern of slowing growth in Europe and China, the biggest metals consumer. Rio Tinto Group, the third-biggest mining company, said in June it had begun a review that may lead to job cuts and staff relocations in Australia to cut costs.
“Iron ore projects in execution will continue as planned,” BHP said in the statement. Chief Executive Officer Marius Kloppers today will open the company’s new 3,000-person office in Perth, the capital of Western Australia, Fiona Martin, a BHP spokeswoman said by phone. The state is home to the company’s main iron ore mines.
BHP won’t meet its five-year $80 billion spending target for building new mines and expanding operations as it combats higher costs and lower prices, Chairman Jac Nasser said in May.
The company’s board is due this year to decide on approving the Olympic Dam copper-uranium-gold mine expansion in South Australia, an iron-ore port expansion in Western Australia and a potash project in Canada. The three projects may cost a combined $68 billion to build, according to a May 23 estimate from Deutsche Bank AG. The bank estimated Olympic Dam alone will cost $33 billion.
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