Anglo-Australian mining giant BHP Billiton is ramping up productivity drives and cost cuts as it looks to free up more cash for project expansions and shareholder dividends.
The company is now targeting a $4 billion annualized productivity gain in its core portfolio by the end of the 2017 fiscal year, a $500 million increase over its previous guidance.
BHP said it will meet its productivity gain goal by reducing cash costs by at least $2.6 billion and boosting output volumes from its existing operations.
In August, the company reported annualized savings of $2.9 billion during the fiscal year to June 30 that included $1.9 billion in cost cuts.
“Improved capital productivity will allow planned investment to be reduced from $14.8 billion to $14.2 billion in the 2015 financial year and to $13 billion in the 2016 financial year with no change to expected production growth,” the BHP said.
The new cuts come on the heels of BHP’s planned reorganization that will spin off non-core assets in mineral mining and create a $20 billion resource company.
“The group’s core assets generated more than 96 per cent of its operating profit in the 2014 financial year, so we can cut complexity and lower costs without losing the benefits of scale and diversity,” CEO Andrew Mackenzie said.