Mining giant BHP Billiton says China will continue to demand high-quality iron ore and new demand will emerge from immature economies such as India.
Chief executive Andrew Mackenzie told the company’s annual general meeting that several of the group’s commodities are currently trading above long-term price forecasts, but geopolitical uncertainty and protectionism could hinder trade and business confidence.
“However, our long-term view for markets remains positive,” he said.
Population growth and rising living standards will drive demand for energy, metals and minerals for decades into the future, Mr Mackenzie said.
“New demand centres will emerge where the key levers of industrialisation and urbanisation are still immature, such as India,” he said.
Although China’s housing and automotive sectors are expected to weaken, its infrastructure sector will remain strong, he said, reinforced by China’s plan to improve its trade links, known as the belt and road initiative.
China’s desire to improve safety and the environment by making industry more efficient, especially steelmaking, is expected to generate high premiums for superior-quality iron ore, coal and copper, Mr Mackenzie said.
Chairman Ken MacKenzie said the US is now operating at close to full employment but policy changes and the unwinding of low interest rates are creating global uncertainty.
The slow progress of Brexit talks in Europe is adding to that uncertainty.
But in the long term, BHP is optimistic that fair and inclusive trade agreements will support a healthy global trade environment, Mr MacKenzie said.
“WIthin this global economic backdrop, we believe BHP is well placed to create value for shareholders and to continue to make a difference,” he said.
Ken MacKenzie also said electricity markets should be technology-neutral, not favouring any particular energy source.
He said it was up to governments to provide clear targets for emission reductions and energy stability.
“Then it’s up to the market to determine the least-cost means of meeting these goals,” he said.
Mr MacKenzie said BHP accepts the science of climate change and believes that the world must limit the impacts of climate change whilst providing secure and affordable energy.
He said BHP is reviewing its membership of industry associations that take a view that is materially different to that of BHP, with results of that review due by the end of 2017.
“Having regard to the overall risks and benefits of membership, BHP may decide to remain a member, impose conditions or other requirements, or cease membership,” he said.
Source: AAP & Hellenic Shipping News