BHP Billiton iron ore president Jimmy Wilson, today announced that the company plans to cut unit costs at Western Australia Iron Ore (WAIO) by at least 25 percent and the potential to increase capacity there by 65 million mt per year at a very low capital cost.
Mr Wilson also outlined BHP Billiton's view of the long-term supply and demand trends in the iron ore market.
"We continue to see healthy demand growth for iron ore in the mid-term as Chinese steel production is expected to increase by approximately 25 percent to between 1-1.1 billion mt in the early to mid-2020s. Meanwhile, steel production growth in other emerging economies is outpacing China as those nations urbanise and industrialise. We expect to see a compound annual growth rate for global steel production of between 2.5-3 percent between now and 2030," he said.
Mr Wilson highlighted that the company aims to decrease production cost by 25 percent compared to 2014 financial year and to add 65 million of capacity at WAIO.
"We have already significantly cut the cost of production at WAIO and plan to go further. We expect unit cash costs of less than $20 per mt in the medium term, a reduction of more than 25 percent on the average achieved in the 2014 financial year. We aim to be the lowest cost supplier to China on an all-in cash basis," said Mr Wilson.
Mr Wilson also said BHP Billiton could add 65 million mt of capacity at WAIO at a capital intensity of approximately $30 per annual mt, taking total system capacity from 225 million mt per year to 290 million mt per year by the end of the 2017 financial year.