BHP Billiton announces plans to lower copper prices


BHP Billiton President Copper, Daniel Malchuk, has today announced plans to lower copper unit costs to US$1.08 per pound in the 2017 financial year, supporting strong cash margins even at the prices of today. According to Mr Malchuk, over this period, the release of latent capacity across the portfolio will also help annual Group copper production grow to approximately 1.7 Mt at very low cost.

Coil of Copper
Coil of Copper

While near-term oversupply is weighing on current prices, Mr Malchuk believes attractive long-term fundamentals continue to support the positive outlook.

“We see a number of factors creating the conditions for a significant supply deficit by the end of the decade. Grade decline, falling investment across the sector, the lack of greenfield projects and challenges accessing sustainable power and water are all likely to constrain industry supply. Meanwhile we expect robust demand from China and non-OECD countries to add to the deficit.”

Mr Malchuk reported BHP Billiton’s Copper portfolio comprised of large, long life assets competitively positioned on the cost curve. “We have the industry’s largest copper resource and our business will gain momentum over the next two years with lower costs and higher production across our major assets as we safely improve productivity.”

According to the statement to Australian Manufacturing, Olympic Dam unit costs are expected to fall 48 per cent by the end of the 2017 financial year to US$1.00 per pound, repositioning the asset at the low end cost point. “Over the same period Spence unit costs are expected to fall 10 per cent to 87 US cents per pound. Low cost debottlenecking projects will release latent capacity, supporting sustainable production of approximately 200 ktpa at both Olympic Dam and Spence from the 2016 financial year,” he added.