There has been criticism of BHP and rival Rio Tinto and the heavy reliance on their respective iron ore businesses, particularly in the wake of steep price drops and increased volatility in the past few months.

Both companies generate their largest revenue and profit from iron ore with BHP’s iron ore business contributing $US22.6 billion ($A21.6 billion) or 31.3% of the total 2012 financial year revenue of $72.2 billion.

When it came down to earnings before interest and tax, the dominance of the iron ore business became more evident, with the division accounting for over 52% of BHP’s earnings before interest and tax.

Kloppers told the AGM it was the company’s diversification strategy that had got it through the global financial crisis.

“Our diversification strategy reduces our exposure to any one commodity or currency – the value of this has been demonstrated time and again, most recently over the past year where your company has outperformed its peers across a number of dimensions,” he said.

“Combined with disciplined financial management, it is this diversification strategy that helps deliver resilient cash flows, allowing us to invest in our business throughout the commodity cycle.”

Kloppers pointed out that no other company had the mix of minerals and oil and gas that BHP had.

“The value of this level of diversification is particularly evident during times of significant market volatility,” he said.

“Illustrating the value of diversification, while market commentators and many of our competitors were more materially impacted by the decline in iron ore prices during that period, stronger prices for crude oil, liquefied natural gas and thermal coal delivered a substantial boost to our profits.”

Kloppers said the fall in commodity prices made costs more critical.

“In response to the changing environment we have taken decisive and proactive action to ensure we remain at the lower end of the cost curve and our focus in this regard is ongoing,” he said.

“To this end, you will have seen us re-sequence our growth portfolio, slow down or stop some development projects, shut down several higher cost operations and commence a significant and targeted cost reduction program across the group.

“This program will substantially reduce operating costs and non-essential expenditure which is critical in the current environment.”

Despite the challenging times, Kloppers reiterated the company’s 19 major growth projects which were expected to generate a 15% rate of return on investment.

“Our portfolio is perfectly suited to the economic conditions that lie ahead, and it is for this reason we are even better placed to outperform our peers over the next decade, and well into the future.”