×

UPDATE 1-BHP to focus on cost cuts, sees upside in copper, steel prices

(Adds details about cost cuts, background)

Nov 28 (Reuters) - Top global miner BHP Billiton Ltd said on Tuesday it expects to cut costs further across its Australian iron ore, copper and coal operations, targeting $1.6 billion in productivity gains over the next two years.

"By sharing knowledge and replicating best practice across our global portfolio, weve been able to substantially reduce unit costs at our Australian mining operations over the last five years. But we have further to go," BHP Minerals Australia President Mike Henry told analysts at a briefing in Adelaide.

In a bullish outlook, the company said steel and raw materials prices could rebound sharply before February as buyers look to replenish stocks.

"While steel production in China will fall in the short term due to the mandated winter cuts and this could impact short term demand for iron ore and met coal.. record margins means competition for premium quality raw materials is high," Vice President of Marketing Vicky Binns told the same investor call.

"This gives substantial price support for most of our iron ore and met coal (production). The push towards high-quality raw material is not only short term. Continued supply-side reform and increased governmental focus on compliance to environmental regulations means that structural reform will drive high quality premium differentials."

Meanwhile in copper, Binns said that the short-term outlook was supported by a shortage of copper concentrates, after several disruptions at mines and the potential for work stoppages over wage agreements in Chile and Peru into 2018, as well as changes to Chinas scrap import regulations.

(Reporting by Shashwat Pradhan in Bengaluru and Melanie Burton; Editing by Dan Grebler and Lisa Shumaker)