BHP to Hike Coal Output by 50%

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By Vittorio Hernandez | August 27, 2012 9:35 AM EST

BHP Billiton (ASX: BHP) may have shelved expansion plans at the Olympic Dam, but the mining giant is still on an expansion mode in other areas of operations. BHP Chief Executive Marius Kloppers disclosed on Sunday that the company will boost its coal output in Queensland by 50 per cent by hiking production at 10 per cent for the next two years.

Besides increasing production and output in Queensland, he said BHP targets a similar 50 per cent increase in copper production at its Econdida mine which is a joint venture Rio Tinto (ASX: RIO) in Brazil. The hike in production and spending will push through even if China has lower demand and BHP suffered a 35 per cent contraction in annual profit.

For these expansion plans, Mr Kloppers said BHP will spend $22 billion in 2012 spread across 20 project. He hinted that BHP is still committed to the Olympic Dam project at a later date when business conditions are more favourable.

"The combination of high exchange rate, high cost and high energy costs which we've got in Australia at the moment is a pretty unique set of circumstances," The Australian quoted Mr Kloppers.

"If you can get any of those variable to change - plus we can make some technological breakthroughs - then we still think this is a wonderful ore body which is going to be a very major mine in due course," he explained.

Due to plummeting commodity prices in the global market, BHP reported last week a yearly profit of $15.42 billion, its first loss in three years prompting analysts to ask if Australia's mining boom has ended.

"The rate of growth in China may have slowed down a bit, (but) China's economy is very definitely still growing, and growing at the highest rate of the major economies in the world," Mr Kloppers said.

"We believe that while the absolute demand growth for products is going to be lower than we've seen in some recent years we still believe there are very attractive opportunities for our company and indeed for Australia," he said.

On Friday, BHP Billiton President for Iron Ore Jimmy Wilson said the Outer Ore project expansion in Western Australia remains part of the miner's long-term strategy, but is not its best option for the moment.

He made the assurance following the announcement on the same day by the WA Minister for Transport and the Port Hedland Port Authority approval for the development of two additional berths in the inner Harbour. However, the berths do not guarantee shipping capacity beyond BHP's current 240 metric tonnes per annum throughput allocation.

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