BHP Billiton Ltd, the world’s biggest mining company, expects “long-term” price declines for its commodities as slower economic expansion in China weighs on demand, chief executive officer Marius Kloppers said.
“We go through a pretty rigorous process to pick those long-term prices,” Kloppers told the Inside Business program on the Australian Broadcasting Corp. “They are, by and large, lower. Some products are going to more attractive than others.”
BHP last week put on hold approvals for about US$68 billion of projects, including the Olympic Dam expansion in South Australia after second-half profit slumped.
Photo: AFP / BHP Billiton
Kloppers said on yesterday’s program he’s seeking to control costs and will not allocate new capital to industries such as aluminum and nickel as Melbourne-based BHP narrows its exploration focus.
Australia’s economy has been bolstered in recent years by the biggest resources bonanza since a gold rush in the 1850s on Chinese-led demand for iron ore, coal and natural gas. Mining investment will peak within two years, Reserve Bank of Australia Governor Glenn Stevens said on Friday in semiannual testimony at parliament in Canberra, a day after Australian Resources Minister Martin Ferguson said the boom was over.
BHP, which this month wrote down the value of western Australia nickel operations and US shale gas assets by US$3.3 billion, is now only exploring for oil, gas and copper, Kloppers said at the program.
Along with coal and iron ore, those five products are the primary profit drivers at BHP, he said. Potash, a form of potassium used to strengthen roots and help plants resist drought, may join that group as BHP develops its Canadian projects, he said.
Shares of BHP have fallen 3.9 percent this year, trailing the 7.2 percent gain by Australia’s benchmark S&P/ASX 200 index.
Prices will decline in the long term, “across the product suite,” Kloppers said. “That is what we have assumed in our planning processes for the last couple of years and we see no reason to change that.”
As China’s economic growth slows, demand for BHP’s products will rise at a slower pace, Kloppers said.
China, the world’s second-largest economy, expanded 7.6 percent in the second quarter, the slowest pace in three years. Brazil’s Vale SA, the biggest iron ore producer, said this month that China’s “golden years” are gone.
Still, Kloppers said there are “attractive opportunities” for BHP and the Australian company plans to increase capital expenditure this year compared with last year.
BHP should be able to sell its commodities in greater quantities even as prices fall, he said.
Volumes across the group should increase about 10 percent in each of the next two years, he told the program. BHP plans to expand the capacity of its Queensland coal business 50 percent in the next two years and the output of the Escondida copper mine, the world’s largest, by the same amount, he said.
“We will only exit if we get value for the assets,” he said. “What we’ve done up until now is just to say, ‘We will not spend new capital on those projects,’ and that is pretty much the case for aluminum. It is also the case for nickel.”
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day