When BHP Billiton chief executive Andrew Mackenzie talked about shrinking to greatness, this was probably not what he had in mind.
The mining giant is expected to report declining annual production in four of its five "pillar" commodities on Wednesday, continuing a trend that has been under way for two years.
A combination of strategy, cyclones, industrial action, grade decline, asset sales and a tragic dam collapse have ensured BHP's output has gone backward in recent years.
If UBS's forecasts for fiscal 2017 production are correct, output from BHP's copper, petroleum and thermal coal divisions will have declined by close to 20 per cent since fiscal 2015; the first year that BHP's production numbers excluded the assets that now belong to South32.
Some of the decline in production has been deliberate; BHP intentionally reduced petroleum production in recent years because of weak oil prices and a desire to preserve its assets for improved prices in the future.
But there was never supposed to be a decline in iron ore output; the Samarco disaster of November 2015 has robbed BHP of about 15 million tonnes per year.
Growth set to resume
UBS believes BHP's iron ore exports (excluding tonnes owned by joint venture partners like Itochu) amounted to 230 million tonnes in fiscal 2017, which if correct, would be better than fiscal 2016 but less than the 233 million tonnes shipped in fiscal 2015.
UBS believes coking coal production will be about 9 per cent lower than fiscal 2015 levels, thanks to Cyclone Debbie.
But in good news for BHP shareholders, some analysts believe the trend will soon turn, with production growth set to resume over the next 12 months.
Shaw and Partners analyst Peter O'Connor said he was optimistic about BHP's growth prospects in fiscal 2018 and indeed the next five years.
"BHP has a significant amount of latent capacity in almost every asset that it has," he said.
"BHP's copper equivalent growth, all things being equal in fiscal 2018, will be 5 per cent. That is a big year."
Major contributor
Rising production at Escondida, on the back of installing a third concentrator at the Chilean mine, will be the major contributor to growth over the next year.
BHP's Western Australian iron ore business is scheduled to increase annual exports by 20 million tonnes over the next 24 months, and if Samarco restarts, the iron ore division could also be boasting strong growth.
Mr O'Connor said BHP would grow at more than 4 per cent in fiscal 2019 and 2020, while growing at around 3 per cent per year until 2023.
"They are pretty good numbers and, sure, part of that is because they have [previously] had calamitous grade, strikes, weather and so on, but that is mining," he said.
"I think the new chairman is in a really good position to make some extraordinarily significant wins over a multi-year period partly because of the latent capacity and partly because of the fat in the system."
