Speaking at the company’s strategy day in London overnight, Mackenzie said the company’s 19 core assets offered returns of more than 20%.

“I find it very hard to see any deal that would be attractive to this company with those high standards of selective capital investment,” he said in response to a question.

He said M&A was “off the table”

Mackenzie said the company’s simplified portfolio, which will come about as the result of a planned demerger next year, would result in lower operating costs and improved capital efficiency.

“A simpler portfolio, focused on our 19 core assets, will retain an optimal level of diversification while generating even stronger growth and margins,” he said.

And the company announced further simplification with the proposed sale of its Fayetteville shale gas assets in Arkansas.

“However, we will only divest the field if it maximises value for shareholders.”

Another asset on the chopping block is Nickel West near Kalgoorlie, Western Australia, but there was no progress to report and Mackenzie said the sales process continued.

Production from core assets is expected to grow by 23% over the two years to the end of the 2015 financial year as the company completes a number of brownfield investments.

BHP also flagged continued cost reduction, with Escondida costs to fall another 5% in FY15 after dropping 22% in the last two years, despite declining grades.

Western Australian iron ore costs dropped 12% in the six months to June 30 and are forecast to drop by 25% in the medium-term to below $US20 per tonne.

Queensland coal costs are set to drop 10% in FY15 to below $US90/t.

More than $US2.3 billion of BHP’s forecast minimum $US3.5 billion in annualised productivity gains by the end of FY17 are expected to come from cash cost savings.

“We believe we can significantly reduce annual capital expenditure relative to our current plans while maintaining our growth trajectory,” Mackenzie said.

The company said its capital management framework defined four priorities for cashflow – retaining a solid A credit rating; to maintain or grow the progressive base dividend, to invest selectively through the cycle, and to return excess capital to shareholders.

“We see our capital management strategy as a precondition to maximising shareholder value,” Mackenzie said.

“It has allowed us to invest through the cycle and grow our dividend at an average annual rate of 17% over the last decade without interruption.

“By safely improving operating and capital efficiency we will maximise value and increase cash returns to our shareholders.”

BHP will hold another strategy day in Sydney next month.