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Mining giant BHP outlines plans to cut costs
The Anglo-Australian resources group is aiming to simplify and strengthen its business, and said it was looking to save $US4 billion a year in running costs - US$500 million more than previously flagged - by the end of the 2017 financial year. Chief executive Andrew Mackenzie said the proposed spin-off of some poorer performing assets, including aluminium, manganese, silver and selected coal and nickel operations, would allow BHP to better organise operations. "The group's core assets generated more than 96 percent of operating profit in the 2014 financial year, so we can cut complexity and lower costs without losing the benefits of scale and diversity." "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." A vote on the demerger is expected in May. The US$4 billion productivity gains are expected to include a reduction in cash-costs of $US2.6 billion a year, Mackenzie said. The company also plans to cut exploration costs from $US14. 8 billion to US$13 billion by the financial year ending June 2016 "With no impact on growth". BHP shares were up 3.85 percent to Aus$32.

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