JOHANNESBURG (miningweekly.com) – Though diversified mining major BHP Billiton remains confident in the long-term outlook for commodities, it is not waiting for prices to recover. Instead, it is looking to increase value by improving productivity, investing in projects and increasing exploration activity to take advantage of falling costs.

“We have everything we need in our portfolio right now to significantly increase the value of the company," said BHP Billiton chief executive Andrew Mackenzie, who maintained that the company could still value in all market conditions.

Speaking at the Bank of America Merrill Lynch’s Global Metals Mining and Steel Conference, in Florida, on Tuesday, Mackenzie outlined that the company’s midterm growth strategy focused on growing cash returns for shareholders.
 
"We will continue to improve productivity, with a further $3.6-billion of gains expected by the end of the 2017 financial year. Unit costs in our major businesses are expected to fall to almost half the levels experienced five years ago [and we] are maintaining momentum with more to come,” he said.

Mackenzie added that the company would also be investing in projects “to unlock the latent capacity” of BHP’s assets, which could add over a million tonnes of copper equivalent capacity at a total capital cost of less than $1.5-billion.

“This is equivalent to more than 10% of BHP Billiton's total current production. We will also maximise the value of our high-quality shale assets in a disciplined manner as prices recover," he said, adding that the company’s portfolio of tier 1 assets offered attractive medium-term growth options.

“We have identified and quantified quality growth projects in oil and copper, with investment decisions on the Mad Dog 2 and Spence projects expected within 18 months."

BHP had also embarked on one of the company’s most significant oil exploration programmes, accelerating activity in the company’s three priority basins, according to Mackenzie.

Following the positive exploration results at Shenzi North, BHP planned to drill a further exploration well, Caicos, in July on its nearby Green Canyon 564 lease, in which BHP Billiton had a 100% interest.  The company would also increase the number of copper targets it would test this year by 38%.

"We have established a new global technology function to implement integrated programmes to unlock resources and lower costs [and] we have opportunities identified at a number of our major assets that we expect to create significant value over time," he said.
 
Mackenzie reiterated that BHP Billiton had the portfolio quality and financial capability to deliver on its growth strategy.
 
"We have the financial strength and the flexibility to pursue a diverse range of opportunities and grow value per share at all points in the cycle, and we have a clear and simple strategy in place to deliver that growth."