Mining giant BHP Billiton to reduce spending by 25%

Mining giant BHP Billiton said Tuesday it plans to cut spending by 25 percent this year and focus on its flagship operations as soft prices and extra supply squeeze resources firms. BHP chief Andrew Mackenzie said the world's largest miner was on track to meet production guidance and deliver 16 percent growth in the next two years. Despite tough operating conditions in the mining sector due to an easing in key market China's rampant growth and a surge in new supply, which has hit prices, Mackenzie said BHP remained profitable by finding savings. "By generating more volume from our existing equipment and lowering unit costs, we will continue to build on the US$2.7 billion reduction in controllable cash costs delivered in the 2013 financial year," Mackenzie said in an update to the Australian stock exchange. "A 25 percent reduction in capital and exploration expenditure is planned for this financial year and our level of investment will decline again next year." Mackenzie said BHP would focus on its "four key pillars" -- coal, iron ore, petroleum and copper -- in a bid to deliver "higher growth, higher margins and strong investment returns". Rival Rio Tinto last week unveiled dramatic spending cuts, aiming to halve capital expenditure by 2015 as it targets a return to profit following its first loss in 18 years in 2012. BHP's net profit slumped 29.5 percent to US$10.88 billion in the year to June, with the company citing slowing global growth andcommodity price volatility. But production in the July-September quarter was higher than analysts expected and BHP, which employs 128,000 people in 26 countries, lifted its key iron ore production guidance for the 2014 financial year to 212 million tonnes.