Oct. 22 (Bloomberg) -- BHP Billiton Ltd., the world’s largest mining company, said demand for minerals is on the verge of “unprecedented growth” as China and India drive consumption.

“To support Asia’s increased demand for natural resources, we need to increase our resource production,” Don Argus, 71, chairman of BHP, said today in a speech at a lunch in Melbourne.

BHP yesterday reported record first-quarter production of iron ore as steel companies resume output at mills in China, Europe and the U.S. on signs of recovery in the global economy. Commodities, as measured by the Reuters/Jefferies CRB index of 19 commodities, have gained 24 percent this year.

“We stand at the threshold of an era of unprecedented growth due to demand generated by China and, in the future, India,” said Argus, who is scheduled to retire and will be succeeded by Jac Nasser as chairman in early 2010. “One of the statistics that gives me that confidence is steel consumption per capita or steel intensity.”

Melbourne-based BHP dropped 0.4 percent to A$39.66 at the 4:10 p.m. Sydney time on the Australian stock exchange.

Commodity demand in China, the largest metals user, “is back on track in a very big way” as the world economy accelerates, CLSA Research Ltd. said last month. There’s been increasingly positive news across most economies over the past three months, BHP said yesterday.

“There is no doubt in my mind that the demand from China will still prevail,” Argus said.

Demand Growth

Australian mineral exports to China and India may rise by A$18 billion by 2015 should it maintain its share of demand growth, Argus said. China accounted for $9.9 billion, or 20 percent, of BHP’s sales in the year ended June 30, according to company data.

BHP’s profit has risen 15-fold this decade under the chairmanship of Argus, who has balanced acquisitions with development of mines and oil fields. Nasser was named as Argus’s successor on Aug. 4 and he takes the helm as commodity prices are gaining on signs economies are recovering from world recession, bolstering prospects for mining companies.

Iron ore imports by China jumped 30 percent to a record 64.6 million tons last month, the nation’s customs office said Oct. 14. The global steel market has bottomed and will grow 9.2 percent next year as demand rebounds in the U.S., Europe and Japan, the World Steel Association said on Oct 12.

China’s economy expanded at the fastest pace in a year as stimulus spending and record lending growth helped the nation lead the world out of recession, the statistics bureau said today in Beijing. Gross domestic product rose 8.9 percent in the third quarter from a year earlier. Separate reports showed industrial production and retail sales accelerated in September.

Today’s figures may spur policy makers to consider how to withdraw record fiscal and monetary stimulus next year without triggering a slowdown in the world’s third-biggest economy.

To contact the reporter on this story: Rebecca Keenan in Melbourne at rkeenan5@bloomberg.net

Last Updated: October 22, 2009 01:21 EDT