Mining heavyweight BHP Billiton Limited (ASX: BHP) has laid out a plan to reinvigorate its growth despite the bearish conditions in the iron ore and oil markets.

Speaking at the Bank of America Merrill Lynch Conference, BHP Billiton’s CEO Andrew Mackenzie said (my emphasis): “Although we remain confident in the long term outlook for commodities, we are not waiting for prices to recover. We have everything we need in our portfolio right now to significantly increase the value of the Company.”

Here are the ways in which the company believes it can create value, and improve cash returns to investors after it recently ended its controversial “progressive dividend policy”:

  1. Productivity Improvements. With commodity prices falling, one of the ways to improve earnings is to reduce costs. BHP believes there is another US$3.6 billion ($4.88 billion) of gains to be achieved from such improvements, with unit costs in its major businesses to be roughly half what they were five years ago.
  2. Higher production. Rather than spending its cash on acquisitions, BHP said it will focus on extracting more from its existing assets. It said: “We are increasing our exploration activity to take advantage of falling costs as others pull back.
  3. Copper. Copper is another area where BHP believes it can extract more value for investors. The miner will invest in existing projects which it thinks could add over 1 million tonnes of copper equivalent capacity by investing less than US$1.5 billion.
  4. Technology. BHP also believes it can unlock resources and lower costs thanks to its new global technology function, having already identified opportunities where it can do so.

Aided by a more positive night for commodity prices, BHP’s shares surged more than 3% after today’s announcements and are now trading at $18.41.

However, Mackenzie’s remarks come at a precarious time for the miner, and the industry as a whole. Iron ore and oil prices have rebounded strongly in recent months, but iron ore in particular is expected to decline sharply in the second half of the calendar year.

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Motley Fool contributor Ryan Newman has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.