This was demonstrated by the 30% fall in mine site unit cash costs at BHP Billiton Mitsubishi Alliance.
But the coal business’s underlying EBIT for the 2013 financial year declined by $US2.1 billion to $746 million, as a 34% and 31% fall in prices for hard coking coal and weak coking coal, respectively, and an 18% fall in thermal coal prices, took their toll.
While increased sales volumes and controllable cash cost savings increased underlying EBIT by $1.5 billion, this could not compensate for the $3.4 billion hit to earnings for lower coal prices.
The company has identified material movement as a substantial proportion of its coal mining cost base and has sought to increase efficiencies at its Goonyella mine in Queensland.
It succeeded in a 25% improvement in truck utilisation at Goonyella, illustrating the potential opportunity across all its open cut coal mines.
BHP Billiton has sought to further consolidate unit costs by merging its Metallurgical Coal and Energy Coal business groups to form the Coal business.
“In view of the new management structure, this business is now considered to be a single reportable segment. There were no inter-segment transactions between the Metallurgical Coal and Energy Coal CSGs and therefore the comparative amounts reported for Coal for the new segment for the years ended 30 June 2012 and 30 June 2011 are an aggregation of previously reported amounts,” the company said.
Coal production is expected to increase by 3% to 114 million tonnes in FY2014. Energy coal production is expected to remain steady at 73Mt while metallurgical coal production is forecast to rise by 9% to 41Mt.
Queensland Coal capacity is expected to increase to 66Mtpa by the end CY2014. Its Caval Ridge mine in Queensland is on track for first production in CY14 and the review of the Hay Point Stage Three Expansion is now complete.
Following the review, BHP Billiton approved a $255 million increase to the original budget of $1.25 billion.
Shipments from the new facilities are now expected to commence in the 2015 calendar year.
“The revised schedule and budget reflects the impact of significant weather interruptions and associated productivity issues which have affected the marine works,” the company said. “The schedule delay is not expected to impact the production profile of the Queensland Coal business.”
The Caval Ridge, Cerrejon P40 and Appin Area 9 projects remain on schedule and budget.
