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BHP Boss Says China has Unrealistic Expectations on Australian Projects

BHP Billiton boss Marius Kloppers feels that the Chief Executive Officers of China’s state owned companies had unrealistic expectation of how quickly you can commission projects in Australia. He added that the failure of mining investments has made the global prices for commodities stay at record levels.

As per Marius Klopper, the high prices for iron ore would likely to stay that way for the next two years at least. He said that the Chinese steel industry is likely to double in the next 15 years but the demand for raw material such as iron ore and coal will come down. This will be due to the country using less energy and metals for each unit of economic growth.

China currently produces 600 million tonnes of steel annually. $34 billion out of a total $58 billion worth of goods imported by China from Australia were iron ore. The second largest import was of metallurgical coal. Both the goods are used as raw material by the steel sector in China.

Prime Minister Julia Gillard’s visit to China this week has seen discussions regarding Chinese companies invested in Australia that would like to see their capability expeditiously produce in those investments. Most of these investments have been in resource companies. The quick returns are desired to make it through the high prices and tight supply that the demand from China has placed on these resources.

Mr Kloppers felt that the dissolution of the benchmark price negotiation system had changed the game. Now the new pricing system in which monthly and quarterly rates were set according to spot prices had made China an attractive market for BHP Billiton.

Joel Scanlon

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Joel Scanlon

Joel emigrated to Australia in 1995 and worked for five years in the mining industry as an exploration geotechnician, using GIS mapping and CAD software. Upon moving to the North Coast of NSW, Australia Joel worked as a graphic designer for a leading consultancy firm. After that, he ran a successful business providing web services to businesses along the eastern seaboard of Australia. During this time, he developed and launched News-Medical.Net. Joel has been working with AZoNetwork since the company was founded in 2000.

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