Mining giant BHP Billiton ramps up cost-cutting plans as iron ore prices fall
Mining giant BHP Billiton has increased its cost-cutting plans from £2.2billion to £2.5billion following a fall in iron ore, coal and oil prices.
The firm ramped up its self-help measures to offset the potential impact falling prices would have on earnings.
The shares fell 41p to 1621p after it said its forecast for capital spending would be cut by 4 per cent to £9.04billion for the current financial year and that capital spending in 2016 would fall to £8.2billion.
Examining the costs: Mining giant BHP Billiton has increased its cost-cutting plans from £2.2billion to £2.5billion following a fall in iron ore, coal and oil prices
Some of these savings will come from plans to spin off its aluminium, manganese and silver businesses into a separate company in the middle of next year.
Chief executive Andrew Mackenzie said that the demerger will bring more benefits than previously thought.
He added: ‘Put simply, we can organise a company that operates 12 large, core assets differently to one with 30 operated assets of varying sizes across a broader range of commodities.
‘We can bring senior management closer to the operations, reduce duplication and cut functional costs.’
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