The world's biggest miner, BHP Billiton Ltd. (BHP, BHP.AU) aims to increase production by about 10% a year for the next two years, potentially offsetting lower prices that it expects for most of its products over the longer term.
Speaking on ABC's Inside Business program, BHP Billiton Chief Executive Marius Kloppers said: "without wanting to make a very precise prediction I would not be satisfied entirely if we didn't manage to grow volumes by about 10% or so over each of the next two years."
While declining to make a short-term prediction for prices, Mr. Kloppers said BHP's long-term price assumptions for most of its products are for "mean reversion of prices toward longer-term pricing points that are lower than today's prices."
Mr. Kloppers said BHP was targeting a 50% increase in coal production from Queensland state, and a 50% rise in copper production from its Escondida mine that it operates in a joint venture with Rio Tinto PLC (RIO, RIO.LN) in Brazil.
BHP now has 20 projects underway, costing a combined $22.8 billion. That is more than the company spent in the last financial year but BHP has scaled back longer-term plans to invest more than $80 billion over five years to ensure it was able to capitalize on Asia's demand for materials such as coal for firing power stations and iron ore used in steel frames during construction of high-rise buildings.
BHP last week deferred plans to spend about $30 billion to expand its massive Olympic Dam copper and uranium mine in South Australia state, due to rising costs and weakening Chinese demand. It also postponed plans to expand its iron ore port operation in Western Australia, and a project to develop a coal deposit to the east of the country.
In the financial year just ended, BHP's production of iron ore, a key driver of earnings, hit another record high. At the same time, iron ore, coking coal and other key raw materials produced by BHP are currently trading at multi-year lows, although prices are still relatively strong compared to long-run historical averages.
Robb M. Stewart in Melbourne contributed to this article.
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