The world's biggest miner on Wednesday also backed away from a plan announced by Chief Executive Marius Kloppers in 2011 to spend $80 billion over five years to expand its iron ore, coal, energy and base metals divisions, banking on continuing high demand from its main market, China.
"It is all about appropriate allocation of capital. When Marius (Kloppers) talked about the $80 billion, the environment was different," Chairman Jacques Nasser said.
"The second thing was investors were saying well where are the growth options? It was a valiant attempt to say we have a multitude of choices and he laid out the choices. He never said we will do it at the same time."
The company was re-thinking its expansion plans "every day," Nasser told reporters at a Sydney business lunch.
Asked if BHP would spend $80 billion over five years, he replied: "No."
Shares in BHP fell 4 percent on Wednesday, hitting their lowest since July 2009. The broader market was down 2.2 percent. The Australian dollar was also under pressure, sliding to its lowest since December.
"They are facing margin pressure through rising capital and operating costs," said Ric Ronge, fund manager at Pengana Global resources Fund, which owns BHP shares.
"Now that commodity prices have plateaued in the medium term, there is pressure on companies with the costs going up. We are seeing a cycle within a super cycle largely because of the macro events in Europe and to a lesser degree in China."
"The tail winds of high commodity prices have contributed to record growth in the sector. Now we have a period where those tail winds are moderating and we expect further easing over time," Nasser said.
Much of BHP's earnings hinges on demand growth in China, the biggest importer of iron ore, copper, nickel and other industrial staples needed to support mass urbanization underway in the world's No. 2 economy.
Chinese data last week showed the country's economic expansion was cooling more than expected. Industrial output growth slowed sharply in April and fixed asset investment, a key driver of the economy, hit its lowest level in nearly a decade.
A Reuters poll after the data showed economists expect economic expansion in the second quarter to slip to 7.9 percent, which would mark the sixth consecutive quarter of weakening growth. Analysts cut their 2012 growth forecasts to 8.2 percent from 8.4 percent, the poll showed.
In March, BHP said it saw signs of flattening in demand for iron ore from China, but remained upbeat on the long-term demand outlook.
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