BHP to raise iron ore output by a fifth despite cost cuts

BHP Billiton's (ASX:BHP) iron ore head said on Wednesday that the diversified mining giant plans to raise capacity by almost a fifth while simultaneously implementing cost cuts.

Fairfax reports
that Jimmy Wilson, president of BHP's iron ore division, expects improvements to existing infrastructure such as harbours, railways and mines to enable the company to lift capacity without the need for huge capital expenditures.

BHP now sees annual iron ore capacity reaching 260 million tonnes at some point in the indefinite future after first hitting 220 million tonnes in 2014.

"The aspiration would be, just by squeezing our existing infrastructure with modest capital investments across our business, to be able to achieve around the 260 million tonne mark," said Wilson.

Australia's leading iron ore miners have been severely hampered this year by precipitous declines in spot prices for the key steel making ingredient, with many rolling back ambitious expansion plans as well as implementing across the board cost cuts.

In August BHP set aside plans for a $20 billion iron ore harbour at Port Hedland in the mineral-rich state of Western Australia, which was expected to double iron ore capacity to 440 million tonnes.