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BHP Billiton has confirmed it has pushed back a decision on the Port Hedland outer harbour development until late next year.

The mining giant said falling profits and commodity prices had forced it to take an axe to ambitious $80 billion capital expansion plans.

Its run of record profits ended yesterday when BHP reported a 35 per cent slump in its bottom line to $US15.4 billion ($14.74 billion).

The global giant said it expected commodity price volatility to continue in the near term before the start of a sustained recovery on world markets early next financial year.

In that environment, BHP has become capital risk averse. Casualties include Port Hedland's outer harbour development and the $US28 billion expansion of South Australia's Olympic Dam.

With $US22.8 billion committed to expansion projects in 2012-13, BHP chief executive Marius Kloppers said there would be no new major project approvals this financial year.

Instead of committing to the $20 billion outer harbour, which would take its iron ore export potential to 350 million tonnes a year, Mr Kloppers said BHP would look for ways to wring more capacity from its existing berths in Port Hedland's inner harbour.

He said BHP's Pilbara mines and rail lines could deliver more iron ore to Port Hedland than its port export allocation allowed.

He was coy on how BHP might "squeeze out" more tonnes through the shipping lanes but recent changes to the port's vessel movement rules hint at the possibility that it and Fortescue Metals Group might be able to pick up capacity from smaller companies unable to move their iron allocations each month.

"In on-water allocation, we've got 240mt in the inner harbour," Mr Kloppers said.

"However, much like one of the other players in that harbour always talks about having 120mt of on-water capacity and a 155mt aim, I think that what we are saying is that our supply chain will deliver the tonnes and what we will do is maximise the throughput through the inner harbour to the maximum that we can squeeze out of it."

Mr Kloppers would not be drawn on whether BHP was factoring in the possible failure of smaller companies to bring on new berths.

The expansion of South Australia's Olympic Dam mine was the second major local casualty of BHP's new aversion to capital risk.

BHP said yesterday it would investigate cheaper options to the planned giant open pit copper, gold and uranium mine as sluggish commodity prices hit the outlook for its economic viability.

The company said a go-ahead decision would not be made before the December 15 deadline for an indenture agreement with the South Australian Government that would set royalty rates for the next 45 years.

With BHP's underlying earnings down 21 per cent to $US17.1 billion, Mr Kloppers said finding other cost savings would be a priority for the year.

"In a regime of falling prices, costs cannot continue to go up forever," he said.

Lower commodity prices reduced BHP's underlying earnings by $US2 billion in the 2012 financial year and cost inflation - mostly in Australia and South Africa - dropped earnings another $US764 million.