BHP Billiton Ltd's (BHP.AX,BLT.L,BBL,BHP) Andrew Mackenzie, who became chief executive last month after Marius Kloppers retired, intends to reduce capital expenditure to a maximum of $15 billion in the coming 2-3 years.
BHP, which has earmarked $22 billion for capital expenditures this year, plans to spend $18 billion in fiscal 2014.
Delivering a speech to the Melbourne Mining Club, Mackenzie said that half of BHP's operating costs are labor and contractors. Every 1 percent improvement in productivity translates to a $170 million saving for the miner.
According to Mackenzie, ''The rebalancing of supply and demand has led to more sustainable prices for our customers. But investors are concerned that we cannot deliver returns in the absence of the higher prices of the past. And governments and communities still want a larger slice of the pie.''
Mackenzie is reported to have said that the mining giant's primary focus is not to grow through acquisitions.
Mackenzie also believes that the Jansen potash project in Canada has to meet some criteria to decide if it has to be continued. Kloppers had delayed the decision on the development of Jansen in Saskatchewan in August.
The project is estimated to cost $15 billion to build and Potash Corp. of Saskatchewan last month said it was unlikely to proceed as its economics do not work.
''Sustainability is a much abused word, but at its heart is a real and important concept,'' Mackenzie noted.
BHP.AX is currently down just over 2 percent at A$33.08.
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