Asian economic growth will slow at some point but demand for raw materials from countries such as China is expected to continue, the chairman of the world’s largest mining company said yesterday.
BHP Billiton’s Don Argus said commodity markets would be volatile in the short term because of the global financial crisis but he was confident longer-term market fundamentals would support growth in demand.
“I have no doubt that economic growth in the Asian region will slow at some point but, if I look at China specifically, the slowdown is concentrated in regions oriented to the light export sector,” Argus said.
“The sectors of the economy oriented more towards domestic consumption are still performing well despite increasing input costs, particularly for energy,” Argus said.
“We expect Asian demand for our products to continue,” he said.
The Anglo-Australian giant, which this year reported a record profit of US$15.4 billion, produces iron ore, coal, oil and gas — products much in demand in rapidly developing Asian nations.
In an annual report to shareholders, Argus said the economies of developing countries were central to the world’s economic growth amid the lessening influence of Europe and the relative shrinkage of the US economy.
“As the world’s largest diversified resources company, we are watching the creation of competitor companies that are spearheading the economic emergence of countries like Russia, Brazil and China.”
He said these economic shifts provided the context for BHP Billiton’s hostile takeover bid for Rio Tinto, the world’s No. 3 miner.
Argus said the two firms together could “help meet the developing economies’ demand for resources better and faster than the two companies do apart.”
Rio has rejected BHP’s 3.4-for-one share offer, saying it significantly undervalues the company.
BHP Billiton also said yesterday it intended to supply uranium to China for decades to come as the Asian superpower ramps up its nuclear energy program.
The chief executive of the Anglo-Australian miner, Marius Kloppers, said BHP Billiton was “very actively positioning” to take advantage of China’s move towardsgreater use of nuclear energy.
“As China is developing its nuclear program, what it’s doing is it’s gearing up for a bigger build program,” Kloppers said in a video address sent to shareholders.
“That will take a couple of years, but clearly we are positioning the company to, from our side, participate in that over decades, not just a couple of years,” he said.
BHP Billiton, whose Olympic Dam in South Australia holds the world’s largest known uranium reserves, said nuclear energy could help cut back on carbon emissions, which are generated from the burning of fossil fuels such as coal.
“If the world is serious about cutting carbon emissions, then you cannot have a debate without the nuclear piece in that debate, because it is the most efficient way to cut carbon emissions,” Argus said.
Australia and China last year ratified a nuclear agreement clearing the way for the export of uranium to feed Beijing’s giant nuclear power program.
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