BHP Billiton's chief executive Andrew Mackenzie said on Thursday that the global mining giant was switching its focus to energy, with iron ore and coal to receive less emphasis as China's demand for steel slows.
Mackenzie said the growing focus on BHP's energy assets, including copper, fossil fuels and uranium, would occur as the firm moves to tap opportunities in the sector amid rising living standards.
“If the world continues to progress in the way we think about it, where steel-making may become less important but still strong and growing and... a high rise in living standards particularly with the growing population in Asia becomes more critical, then that's going to increase the demand for energy,” he told The Australian newspaper.
“The bigger investment will be energy, and the issue with energy is we need diversification within the energy space because the world hasn't got a magic or clear pathway through to the energy supply of the future.”
Mackenzie said BHP, as the lowest-cost supplier of coal and iron ore, would continue to have a good future in the two commodities “perhaps through more productivity opening up higher margins, even by just running current operations well and keeping their capacity”.
The world's biggest miner in August reported a 23.2 percent jump in annual net profit, as spending cuts and productivity gains offset weaker commodity prices.
BHP also announced plans to demerge parts of its business to focus exclusively on its core long-life operations - iron ore, copper, petroleum, coal and potash.
The new entity, provisionally named NewCo, will include some of BHP's non-core assets such aluminium, coal, manganese, nickel and silver.
Mackenzie told the newspaper further debate on carbon emissions and the role of nuclear power, fossil fuels and renewable resources would help clarify the energy sector's future.
Iron ore and coal made up 53.34 percent of BHP's operating profit in the 2014 financial year, while petroleum, potash and copper generated 46.63 percent. - Sapa-AFP