He told an analysts’ meeting that each operation would be scrutinised in a bid to curtail operating costs, which have already been lowered by 17% to $US59 per tonne.

“Within the met coal business, we have rationalized,” he told the analysts’ meeting as reported by the Seeking Alpha website.

“We've closed Crinum and Norwich Park and thank you …to [BHP Coal president] Mike Henry and his team.

“Despite some very difficult conditions, they have been able to keep all of the operations cash positive.

“You've also seen that we've made one or two moves to try and be even more creative around some of our mines and in which we might use contractors and so on. Obviously a source of some dispute, but there's still more to go and inefficiencies and longer term.

“So we will keep working, we'll keep rationalizing almost down to individual cut and we'll keep pushing on everything to get our productivity up and we do expect that some modest recovery is possible, but probably a long way off.”

Mackenzie said that on the supply side of coal markets there was still some way to go as the industry is rationalised, especially in North America.

“We've seen some relief not much on the supply picture with a lot of the US players in some form of bankruptcy proceedings and some evidence that in our markets...customers are turning more to supplies out of places like the Bowen Basin,” he said.

“I would say there is a supply of you like demand upside particularly from India, which is one of the brighter lights, if you like on the economic horizon right now.”

BHP’s coal operations benefited from a stronger US dollar, lower diesel prices and a reduction in labour and contractor costs reflecting continued productivity improvements.