New bosses at two of the world's largest mining companies, BHP Billiton and Rio Tinto , wooed investors on Tuesday with promises to slash billions of dollars of spending and press ahead with asset sales, boosting returns.
Mining companies have come under pressure from investors for splashing out on pricey projects during the industry's boom years - at the expense of shareholder returns - while costs spiralled out of control.
At an industry conference that marks one of his first public appearances, new BHP boss Andrew Mackenzie promised a "relentless" focus on productivity to boost margins, and said capital and exploration expenditure next year would drop to around $18 billion, including investment in the miner's onshore oil and gas business.
That is down almost a fifth from BHP's 2013 financial year - as spending associated with its major projects drops - and is expected to fall further to some $15 billion, "or less" as the company reduces the number of major projects that are approved, hoping to keep a lid on debt levels.
Analysts welcomed the drop, though some had expected more.
"I stress, if our investment criteria cannot be met in any one project, product or geography, we will redirect our capital elsewhere or we will not invest," Mackenzie said, adding lower spending would mean "even more capital returned to shareholders".
Mackenzie, who took up his role at the world's largest mining company earlier this month, said the group was also pressing ahead with its plan to focus on big projects in more developed countries. He did not exclude an approval for its Jansen potash project in Canada, on which no decision has been made - but promised sales.
"It will come as no surprise that I will continue to simplify the portfolio. However, as I have said in the past, value will remain a primary consideration," he said.
BHP has sold off $5 billion of assets this financial year, including the Yeelirrie uranium deposit, a stake in Richards Bay Minerals, its diamond business, and is in the process of selling the Pinto Valley copper mine in Arizona.
Speaking at the same conference, Rio's own new chief executive, Sam Walsh, echoed comments on lower spending, confirming $2 billion of cost cuts in 2013. Like BHP, Rio will seek to reduce its capital expenditure - from $17 billion last year to around $13 billion.
Walsh also promised "significant cash proceeds" from asset sales this year, as Rio, like its peers, focuses on core assets. Rio, battling its debt burden, has a long list of assets on the block, from its diamond arm to aluminium.
_0">"We are looking at further disposals of potential non-core assets, in addition to those already announced," Walsh said.
Shareholders have welcomed the cost cuts, miners' new-found focus on returns and the gospel of "acting like owners", but at least one investor questioned BHP's Mackenzie on the risk of "shareholder-forced group-think" and the need to invest even when prices are lower.
"I will invest less to grow the company more," Mackenzie said, promising to invest "through the cycle rather than in a counter cyclical way".
The first major test is likely to be the $8 billion Jansen project - one of few major greenfield projects still in the BHP pipeline, though it will not be approved before next year.
"(Jansen) has to perform," Mackenzie told the conference.
"It has to compete for a smaller amount of capital."
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