AM: We’ve said we can do another $3. 5bn on an annualised basis out to financial year 2017. This is now the guiding principle by which ultimately we want to grow this company. I’m not going to answer whether it’s doubling or tripling. I’ve been a bit bolder than I probably thought I would be in giving some forward guidance to the market.
We’ve done an awful lot for a lot of shareholders at the moment and the company is doing very well in meeting the commitments we’ve made. At the full year, we over-delivered on productivity, we over-delivered on capital reductions, so our cash generation was greater than we thought was possible given the price deck at the half-year result.
We continue to have success with heap leach that will dramatically reduce the processing costs and we’ll talk about things during the course of this year about how we can in a more modest, but nonetheless, determined way continue to grow the output from Olympic Dam and think about this as a multi-decade type of endeavour working on one of the, if not the best undeveloped copper ore body in the world, or only partially developed, if you like, but you know we’re now a very small part of it with the underground at the moment.
We said that we would not rebase the dividend when the NewCo assets leave BHP Billiton. So, even though we’re losing, you know, a piece of our cash pool that could allow us to pay dividends, we will continue to pay the dividend at the level as it is today or announced with the results, so that will take the payout ratio into the 50s.
We’re through that now and the fact that Australia is a go-ahead country, very open to new technology, new ways of thinking and not an unreasonable amount of flexibility, then the stimulus of things like PwC means there is becoming an Australian response and in many ways what that will do is that it will create in terms of using technology — the technology of big data, which we use through our systems, the technology of automation, better trucks and so I would overemphasise that Australia can still come back to lead the world in terms of productivity.
There are quite a few things we’re doing at the moment in driving improved performance in iron ore that are derived initially from things that were pioneered by some of the NewCo assets. So, I think this is the right time to do it. The knowledge is there.
We’ve been clear for the better part of two years and probably longer than that, and it’s just started very much under Marius, we saw real power in simplifying the portfolio and concentrating BHP Billiton on a small number of very large-scale, world-class assets, almost beyond Tier 1.
We concluded for the majority of the remaining assets, it would be more effective to demerge them in the way that we’ve announced this week and then tidy things up at the margin with a few more trade sales of things like Nickel West, small-scale petroleum and what remains of our North American coal business.
We’ve seen our way through to achieving that with minimal capital, so we may get there with a capital intensity of about $50 per annual tonne, which is world class as a number and that’s what’s possible in Australia and with some of the investments that have been made in the previous year.
Some of the strongest performance that we’ve announced — very, very positive full-year results has actually come from the NewCo assets, aluminium and manganese and nickel — even though they’ve got slightly depressed prices.
AM: I don’t want to give a prediction like that. But if I look backward over 10 years, we’ve given $64bn to shareholders roughly at a payout ratio of about 50 per cent.
If you can reduce the burn rate and do it even more effectively, then I’ll take that anytime because we’re still waiting to see when the market really sends the signals it wants a new greenfield mine and at any stage, once you have a shaft, you’re still three years from being able to turn first potash.
You can see we’ve not included certain assets in there because they’ve been previously sold or are awaiting to be sold that we were thinking of a portfolio that needed to have assets which were smaller scale, but still high quality in world standards and in the industries in which they played.
AM: We’ve announced a couple of things recently that we’re getting costs down to the levels of Escondida, which is the most important thing, so it’s getting competitive.
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