The June 2017 target is in addition to the $3 billion in gains already realised since 2012, while increasing volume by 5 million tonnes between FY15 and FY18.

BHP president operations Minerals Australia Mike Henry told investors at a briefing that the competitiveness of the coal business would be increased by unlocking productivity, reducing costs and releasing latent capacity.

“Rather than waiting for higher prices, we have been deliberate in shaping a quality, focused portfolio that allows us to deliver value in challenging market conditions and positions us well for an expected longer-term improvement in coal market fundamentals,” he said.

Henry formerly oversaw the coal business until a new operating model created Minerals Australia and promoted him to the head of all Australian operations.

He said today there was still further cost reductions to be realised under the new structure.

Cash costs have dropped by around 25% since FY12, and BHP sees a further 16% reduction over the next year.

BHP has 10 Australian coal mines in Queensland and New South Wales.

“Even in today’s difficult environment, all of the operations remain cash positive,” Henry said.

He added that BHP’s strong position in coal would be supported by an improvement in market fundamentals.

“The developing world needs steel, steel needs coking coal, and we have the strongest resource position in the seaborne market,” Henry said.

“Against the backdrop of greater uncertainty in the outlook for thermal coal, we are confident that base demand in emerging economies will remain resilient for decades to come and our higher quality coal positions us well in an increasingly carbon-constrained world.”

BHP shares last traded A21c lower at $A18.66.