Miner not discouraged by low profit

SYDNEY - Agence France-Presse

A vehicle operates at mining giant BHP Billiton’s Mount Newman iron ore mine in Western Australia. AFP photo

Mining giant BHP Billiton said yesterday it aimed to increase production and hike spending despite a 35 percent slump in yearly profit, citing “attractive opportunities” despite cooling in key market China.

The world’s biggest miner also reiterated its commitment to the huge Olympic Dam copper and uranium project -delayed last week after it declared its first profit drop in three years- saying it would one day be a “very major” mine.

BHP chief Marius Kloppers said the firm hoped to spend $22 billion on projects this year, up from $20 billion last year, playing down the decision to scrap the Olympic Dam expansion in favor of a cheaper option.

“The combination of high exchange rate, high cost and high energy costs which we’ve got in Australia at the moment is a pretty unique set of circumstances,” Kloppers told ABC television. “If you can get any of those variables to change -- plus we can make some technological breakthroughs -- then we still think this is a wonderful ore body which is going to be a very major mine in due course.

“I would not be satisfied entirely if we didn’t manage to grow volumes by about 10 percent or so over each of the next two years,” Kloppers said.

Declaring a drop in annual profit to $15.42 billion amid plunging commodity prices, BHP warned last week there would be no major project approvals over the next 12 months and the viability of more costly parts of its business was under review. But Kloppers said “in reality what we are talking about is just slowing the rate of capex growth going forward”, as he hailed China’s prospects after Australia’s resources minister declared the commodities boom “over.”