BHP Billiton Set to Boost Production Despite Weak Prices – by Alex MacDonald and Scott Patterson (Wall Street Journal – May 10, 2016)

LONDON—Mining giant BHP Billiton Ltd. plans to forge ahead with investments to boost production, particularly in copper and energy, despite a continuing rout in commodities prices.

In a presentation to investors Tuesday, BHP Chief Executive Andrew Mackenzie outlined a plan to lift its current production by more than 10% by investing in existing operations. He said the development will cost less than $1.5 billion over a five-year period.

BHP’s assets “have such high returns that they work even at these very low prices,” Mr. Mackenzie said in an interview following the presentation. He said the company’s plans are primarily focused on expanding its own mines and wells, not on acquisitions. “You can’t be focused on acquisitions because you’re dependent on so many other things,” said Mr. Mackenzie.

Shares of BHP, down 44% in the past year, closed up 2.1% in London, Tuesday. Mr. Mackenzie in his speech said the miner’s investments should earn average returns of about 60% based on current analyst forecasts of commodity prices.

He said BHP also plans to make investment decisions on at least two big projects, one in copper and one in oil, within 18 months. He expects capital expenditure to pick up next year.

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