BHP cuts $400 million from Pilbara expansion budget
Diversified giant miner BHP Billiton (ASX, NYSE: BHP, LSE: BLT) continues to tighten its belt in order to cut costs and boost productivity, announcing it will cut $400 million (AU$434 million) from its touted Pilbara expansion budget.
The world's largest miner and third largest iron ore producer is cutting planned investment on a new blending and rail stockyard at Port Hedland.
Together wit the Pilbara expansion, these projects are expected to increase BHP's iron ore annual production rate to 220 million tonnes a year on a 100% basis.
The cutback will offset a $340 million spending blowout at BHP’s Jimblebar iron ore mine, which received a $1.5 billion capital injection in June from Japan's Itochu Corporation and Mitsui.
In its production report released Wednesday, BHP stressed the project is on budget in Australian dollar terms, with a new estimated cost of $3.6 billion.
Last month the company said it was ready to run a tighter iron ore business as demand began to slow. So far BHP has not made cuts in this division, but it is maintaining a staff-hiring freeze indefinitely.
Image of BHP's Western Australia iron ore operations, courtesy of BHP.