New BHP Billiton boss Andrew Mackenzie has slashed capital spending by 18 per cent and flagged more "substantial" cuts, reinforcing concerns the mining investment boom has peaked.
Speaking at an industry conference in Barcelona in his first major investor presentation as chief executive, Mr Mackenzie said the miner would cut capital and exploration expenditure to $US18 billion for the next financial year, down from $US22 billion the year before.
Crucially, he said, spending would continue to "decline substantially" as the group focused on productivity and enhancing profit from long-running projects.
"You will recognise my passion for our productivity agenda and this extends to our development projects," he said. "Put simply, we must challenge ourselves to increase returns from new investment, in the same way that we need to squeeze returns from our already installed infrastructure."
Mr Mackenzie's speech was made after the close of trade on Tuesday, during which BHP shares gained 0.4 per cent to $34.67.
BHP unveiled $1.9 billion in cost savings when reporting a 58 per cent decline in first-half earnings in February and said no big projects would be commissioned this year.
The declaration of relative austerity by the BHP chief could raise doubts on the next mega-project on BHP's radar, the $US10 billion-plus Jansen potash project in Canada, with BHP expected to decide whether to proceed next year.
Mr Mackenzie, 56, took over as chief executive from Marius Kloppers last week, amid a global changing of the guard at the world's biggest mining company, as record commodity prices waned.
He said the spending cuts were an extension of BHP's long-held strategy.
"Our enduring strategy has worked well for the company and its shareholders," he said. "Strict adherence to this strategy is what has differentiated us and I intend to give it an even sharper focus."
Mr Mackenzie said the global economy continued to strengthen, despite "underlying volatility". He said global growth would continue to underpin demand for resources, with China well placed to sustain its growth trajectory and the US economy gaining momentum.
The risk of persistent oversupply for BHP's major products, including iron ore, had been overstated, particularly as industry-wide project approval rates had slowed, he said.
Mr Mackenzie told investors to expect an even greater focus on the major basins where BHP retained a competitive edge, including the so-called 'four pillars" of its Pilbara iron ore, Queensland coal, Escondida copper in Chile and its onshore petroleum resource in the United States.