Yesterday, Houses and Holes reported that BHP had canned further coal expansion projects as the firm looks to cut costs amid falling commodity prices:
In presentation slides released for an analyst visit to its Queensland coal operations on Wednesday, coal president Dean Dalla Valle said the miner would work to maximise the use of installed capacity, deliver significant cost savings, complete existing expansions and continue to simplify the portfolio. However, it warned of a potential delay and cost blowout at the $US2.5 billion ($2.59 billion) Hay Point expansion project.
…In an environment with a more subdued coal outlook, the coal division’s vice president of finance, Gideon Oberholzer, said the company had significantly cut headcount in the business and had successfully renegotiated terms with some contractors while other contracts had been terminated. He said cash costs at BHP Billiton Mitsubishi Alliance (BMA) operations had fallen to the lowest level since fiscal 2011 after peaking last year.
“No new major projects are being considered,” Mr Oberholzer said. “Our capital expenditure profile will trend toward the rate required to sustain our operations in the medium to long term. We are ‘long’ resource and have sustainably reduced exploration expenditure.”
Today, BHP has lodged its investor presentation slides with the ASX (available here). The key slides are shown below:
Note, in particular, the forecast sharp drop-off in coal related capital expenditures (capex) by BHP over the next two years.
Yesterday’s ABS construction figures showed Queensland as the one bright spot amid the broad-based decline in engineering construction (see next chart). Given that many of BHP’s coal mines are in Queensland’s Bowen Basin, the contraction in forecast coal-based capex by BHP suggests that Queensland capex will soon turn down, in concert with the rest of the nation.
