The major said it expected to cut $US120 million ($A164 million) from the cost base with the job cuts, which will help drive a total reduction of more than $400 million by FY2017.

About $30 million is expected to be saved through insourcing of mine development activities, with the overall goal targeting unit cash costs of $1 per pound.

Along with the cost cuts BHP is also looking to boost production at Olympic Dam, aiming for about 200,000 tonnes per annum from FY2016 and 220,000tpa by FY2019.

The Spence operation in Chile is expected to produce about 200,000tpa this financial year, while Escondida in Chile will average 1.2 million tonnes per annum for the next 10 years.

The expansions and cost cuts come alongside a favourable market outlook.

“We see a number of factors creating the conditions for a significant supply deficit by the end of the decade,” copper president Daniel Malchuk said.

“Grade decline, falling investment across the sector, the lack of greenfield projects and challenges accessing sustainable power and water are all likely to constrain industry supply.

“Meanwhile we expect robust demand from China and non-OECD countries to add to the deficit.”