BHP eyes $4bn saving

BHP Billiton, the world's biggest miner, stepped up its cost-cutting yesterday as it contends with a sharp slide in iron ore, coal and oil prices.

BHP expects to reap savings of $4-billion by June 2017, up from an earlier forecast of $3.5-billion, in the next three years, according to an investor presentation yesterday.

The company - one of the biggest listed on the JSE - is preparing to spin off its South African mining assets into a new entity, Newco, that will be headquartered in Australia.

"We are making good progress and remain on track to complete the demerger in the first half of 2015," said BHP Billiton CEO Andrew Mackenzie.

The demerger is part of BHP's plan to "improve the productivity of our largest businesses".

It will help it to cut capital spending by over $1-billion by 2016.

Newco will contain BHP's smaller aluminium, manganese and silver assets, and some coal and nickel assets, allowing the group to focus on its iron ore, copper, coal and petroleum businesses.

Mike Fraser has been appointed president and chief operating officer for Africa and will be based at Newco's Johannesburg regional office.

Graham Kerr, Newco's CEO, said Fraser has a wealth of experience in Southern Africa.

Fraser has worked in the group's coal, aluminium and manganese operations before being appointed asset president of the Mozal aluminium smelter.

BHP's biggest business, iron ore, has suffered from a 48% plunge in prices this year, largely due to BHP and rivals Rio Tinto and Fortescue Metals flooding the market with low-cost ore.

Prices for two of its other major commodities, coal and oil, have also plunged, with coal at five-and -a-half -year lows and oil near four-year lows, forcing the company to put off plans to return capital to shareholders.