SYDNEY: BHP Billiton said on Monday it plans to boost its exploration budget by 29 percent to around $900 million next year, as the global miner counts on new finds of oil and copper to drive growth in a tough market rather than mergers and acquisitions.
The figure represents 18 percent of BHP's total capital budget of $5 billion over fiscal 2017 and comes amid efforts by big miners to maintain growth while tightening balance sheets.
In December, BHP had projected total fiscal 2016 exploration spending of $700 million.
The lift in exploration spending comes as a flurry of M&A deals earlier this year slows, with fewer assets than expected coming up for sale, leaving mining companies to rely on their own projects to grow.
Petroleum exploration by BHP will focus on deepwater basins in the Gulf of Mexico, the Caribbean and the Northern Beagle basin, off the coast of Western Australia, the company's head of geoscience, Laura Tyler, told a Citigroup investors' briefing.
Copper exploration is targeting deposits in Chile, Peru, the United States, Canada and South Australia, according to Tyler.
"We are investing at a time when most in our sector continue to reduce discretionary spend," Tyler said.
Earlier this year, BHP Chief Executive Andrew Mackenzie told investors he anticipated capital and exploration spending of around $7 billion in the financial year ending June 30 and no more than $5 billion in the 2017 financial year.
"BHP is effectively letting the market know it will be spending more of a lower capex budget on exploration, emphasising petroleum and copper," said Shaw and Partners mining analyst Peter O'Connor. "It's where they see the best growth."
Big miners such as BHP and Rio Tinto haven't ruled out large acquisitions, but have noted few so-called tier-one assets up for sale by rival companies hit harder by a downturn in the sector.
"M&A isn't off the agenda, but BHP isn't waiting around for the next big opportunity," O'Connor said.
Separately, Rio Tinto group executive for growth & innovation, Stephen McIntosh, told the Citi briefing the company was seeing a renewed focus on greenfield projects and a bias toward copper.
"However this is not our exclusive focus and we still have a significant proportion of our expenditure on other commodities," McIntosh said.
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