BHP flags coal mine cost cuts BHP Billiton is set to sell more mines and has all but ruled out an expansion of its struggling coal division. The global resources giant told analysts that its main priority was simplifying and cutting costs across its coal division and that its mines had to earn their right to stay in the business. The company is taking analysts on a tour of its Queensland metallurgical coal mines where it is a major employer and Hay Point port export terminal, which is undergoing a $US2.5 billion expansion. Black coal is Australia's second biggest export earner, generating more than $A40 billion last year in a weak price environment, which has hit government revenues. BHP's contractors and suppliers of equipment and services have been the target for much of the cuts, with contracts renegotiated or terminated. One example, made public last month, was BHP axing a contract with Leighton Holdings at the Peak Downs coking coal mine, replacing it with the smaller and cheaper HSE Mining company. The problems have already led to the closure of two coal mines, the planned sale of a US mine, job losses in the thousands and a long-running industrial dispute. BHP was on track to save $US800 million ($A836.73 million) from coal's costs in the current financial year, it said, out of $US1.9 billion across the group and plans to slash capital spending by a fifth this year. "We will selectively pursue asset divestment opportunities with a firm focus on value," BHP's coal president Dean Dalla Vale told analysts in a presentation. Assets must earn their right to remain in the portfolio. The vice president of finance for coal, Gideon Oberholzer, added that no new major projects were being considered. That is a negative scenario for a division that BHP refers to as one of its "core commodities" along with iron ore, petroleum and copper - with potash an optional fifth for the future. While it said on Wednesday they were profitable and operating at full capacity currently, the coking coal division lost $US101 million in the first half of the financial year. The outlook was subdued, with China able to meet much of its own demand growth and the use of scrap iron set to soar, reducing coal demand, marketing vice president Vicky Binns said. "The market appears comfortably supplied in the near term," she said. Little growth is expected in Europe and Japan. What growth there is will be in South East Asia and Turkey, with India's growth lower than expected so far, Ms Binns said. In a positive sign for Australia, what limited supply growth does occur is expected to come the country because of a lack of new supply globally, she said. BHP shares were 88 cents, or 2.59 per cent, higher at 34.86 at 1456 AEST.