MELBOURNE: Top global miner BHP Billiton outlined plans to boost coal output by 8% over the next three years while slashing costs, and said it would only consider premium, lowest-cost assets for any acquisitions.
BHP Billiton, the world's top exporter of coking coal used in steelmaking and also a producer of energy coal, is in the enviable position of running profitable coal mines at a time when more than half the world's coal mines are losing money.
It remains optimistic about the long-term prospects for its coal business based on the quality of its coal, its low costs and growth prospects in China, India and South-East Asia, but said markets would be challenging in the short to medium term.
"We have the portfolio of assets best placed to meet this future demand," BHP Billiton Minerals Australia president Mike Henry told reporters on Tuesday after an investor presentation.
Making life harder for its rivals, BHP increased its forecast for coking coal output for the current year, ending June 30, by 6% to 42.5 million tonnes, and said it plans to hike production to 46 million tonnes in 2018.
It also aims to slice costs by US$600 million over the next year by getting more out of its trucks, wash plants, and workers, and negotiating better deals on parts and equipment. That would help cut its coking coal costs to 9% over the next year to US$52 a tonne. That compares with coking coal prices which averaged more than US$90 a tonne in the June quarter.
While it has sold, spun off or shut most of its energy coal mines amid a global push to curb carbon emissions, BHP did not rule out bidding for rival Anglo American's one-third stake in the Cerrejon energy coal mine in Colombia or its coking coal mines in Australia.
Henry declined to comment on specific assets, but said any acquisition would have to fit with the company's tighter geographic focus, be high quality, low cost, and come at a good price.
"It would need to enable higher returns and would need to be resilient to all markets," he said.
Analysts have said it would make sense for BHP to own Anglo American's Moranbah and Grosvenor coking coal mines, which are near its own mines in Queensland's Bowen Basin. The company has said it is mainly seeking acquisitions in copper and petroleum.
BHP Billiton owns nine coking coal mines in Australia's Queensland state with Japanese partners Mitsubishi Corp and Mitsui & Co. It also owns the biggest energy coal mine in the Hunter Valley in Australia and a one-third stake in Cerrejon, alongside Anglo American and Glencore Plc. - Reuters
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