BHP Billiton Ltd. (BHP), the world’s biggest mining company, said demand for commodities will remain robust as China, its biggest customer, transitions to a consumption-led economy even as its growth moderates.
“Commodity demand growth will remain robust as the fundamentals of wealth creation, demographics and urbanization continue to drive demand for resources,” Mike Henry, president of BHP’s marketing and technology unit, said today in an e-mailed statement ahead of a speech in Canberra. “However, the shifting dynamics of economic growth will challenge Australia’s traditional understanding of core commodities.”
A gauge of China’s services industry rose to a six-month high, data released today showed, adding to signs that the world’s second-largest economy will sustain a rebound after a two-quarter slowdown. Melbourne-based BHP expects China’s economy to grow at 7 percent to 8 percent in the medium-term, Henry said today.
“Although we expect growth rates to moderate, China will already be building off a very large base, which will translate favorably to commodities demand in the medium term,” Henry said, according to speech notes. “We expect energy will also play a growing part in China’s future commodity demand.”
BHP gained 0.8 percent to A$35.60 at the close of trading in Sydney. The benchmark S&P/ASX 200 Index rose 0.4 percent.
The miner has cut cash costs by $2.7 billion during fiscal 2013, Henry said.
Mining companies began driving down costs last year after the decade-long China-led commodity price boom peaked. BHP, the biggest seller of steelmaking coal and the third-largest iron ore exporter, cut capital spending as investors pressure mining companies to defer expansions and acquisitions. Australia is the world’s biggest exporter of iron ore and coal.
To contact the editor responsible for this story: Jason Rogers at email@example.com