Anglo-Australian mining giant BHP Billiton yesterday posted record iron ore production figures for the second half last year, but warned that while China had driven commodity prices higher, volatility remained.
The world’s largest diversified mining group said its iron ore production for the half-year ended Dec. 31 was up 6 percent compared with the same period a year earlier, at 62.6 million tonnes.
It was “another half year production record for petroleum and iron ore, due to successful growth project delivery,” the company said in a statement.
Total petroleum production rose 17 percent compared with the previous corresponding half-year, to 79.57 million barrels of oil equivalent, it said.
The global miner said the final quarter had seen “strong price recovery across the commodity suite driven by demand in China and restocking in the developed world.”
It noted, however, that the speed of the recovery in developed economies remained uncertain, while the impact of measures to control loan growth in China would add another future variable.
“Consequently, we expect some degree of volatility in the short term outlook for our commodities,” it said.
BHP also said for the six months to December, 54 percent of the iron ore produced in Western Australia was shipped on the annually agreed benchmark price, “with the remainder sold on shorter term reference pricing.”
In years past, only about 15 percent of the key steel-making ingredient was sold outside the benchmark price on the spot market. The spot market currently prices the commodity about 90 percent above the benchmark contract price.
The production figures came as Australian media reported that annual iron ore contract price negotiations between the miners and the China Iron and Steel Association (CISA) were in trouble, with substantive talks yet to take place.
An unnamed mining executive told the Sydney Morning Herald the association was “behaving every bit as irrationally as they did last time.”
“There is no way that anybody is going to want to engage with them,” the executive said.
Price negotiations collapsed last year after Chinese authorities arrested four Rio Tinto executives, including Australian passport-holder Stern Hu (胡士泰), on allegations of industrial espionage relating to iron ore prices.
Hu remains in detention awaiting a decision on whether he will face trial.
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