BHP boss optimistic on resources after China meeting

BHP Billiton boss Andrew Mackenzie has described himself as an optimist in a London speech, telling guests he was "your ray of sunshine".

The chief executive officer told Melbourne Mining Club - at an event in the United Kingdom - that a recent meeting with Chinese Premier Li Kequiang galvanised his feeling that resource markets would remain strong, though less intense than the red hot demand of this century's first decade.

But again, like with much of BHP's public statements in the past 12 months, the focus was on producing more with less.

In the aftermath of sky-high world prices for coal and iron ore, the key for BHP's profits relied on pushing workers and operations to capacity.

"I think, we we were all honest, we were all caught off guard by some extent by the incredible pace of the industrialisation and urbanisation that China has shown in the early part of this century," Mr Mackenzie said.

"Somehow, finding those $5 of savings in unit costs per tonne did not seem that important when prices were skyrocketing, but it really matters now."

When BHP manages to sharpen its activities even just 1%, it amounts to an extra $170 million a year.

The chief executive was in Central Queensland with investors in the final days of May to discuss the health of BHP's mining portfolio.

At those coal operations, BHP has been pushing its mines to capacity or "sweating the assets", renegotiating or reconsidering deals with contractors - an action that has led to some losing work.

In his London speech, Mr Mackenzie likened BHP's overall strategy to that of a Formula One team.

Pit stops are faster not because of technology but because they "micro-analyse" the process.

This is what BHP is trying to do.

"That is the example I have chosen, but when I visit many of our operations and I talk to truck teams or maintenance crews, I find examples that are even more breathtaking than that, that have been achieved in exactly the same way," Mr Mackenzie said.

"Perhaps that's one of our secrets."

Topics:  bhp china mining resources

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