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BHP Billiton sees slowing global growth, but encouraging demand
Source: Edited Press Release
See also
Base Metals Mining Board
Base Metals Mining Catalog
At BHP Billiton's annual meeting Thursday, Don Argus, the chairman, said rates of growth around the world are likely to slow but the company views the global economic outlook as positive. He said the demand outlook for commodities is encouraging. But the outlook is not without risk. Escalating geopolitical tensions, supply disruptions and high energy prices are adding increased uncertainty in markets.
Argus said that growth in north east Asia will continue to be a major driver of the global economy. Japan's expansion is well-established and China's economic growth is expected to remain strong, even if the attempts to cool recent accelerations are successful.
He added that the U.S. economy is slowing from the rapid growth experienced earlier in the year but the company expects it to remain solid.
Argus said that the company expects natural and man-made events will continue to disrupt the supply side of the commodity chain. As well, regulatory approvals and rising capital costs are delaying project developments.
The likely outcome of these circumstances is an extended period of high cyclical prices for the commodities that BHP Billiton produces.
The primary safety indicator, the Total Recordable Injury Frequency Rate, was flat for the year.
In the Aluminium CSG, underlying EBIT increased by 24% to $1.2bn. Higher prices were achieved for both aluminium and alumina. The benefits of our technical expertise are evident at the Mozal and Hillside aluminium smelters in southern Africa, where production records were set again.
Base Metals underlying EBIT rose 149% to $5.4bn. We had record copper production during the year, with the highest ever production from both Escondida in Chile and Antamina in Peru. The integration of Olympic Dam in South Australia made a significant contribution to volumes and all this was achieved at a time of record copper prices.
Two copper projects in Chile were completed during the year and another, Spence, which you can see here, is on schedule to start producing in December this year. At full capacity, Spence will be one of the 20 largest copper mines in the world Thursday.
Carbon Steel Materials – that is iron ore, coking coal and manganese – recorded a 61% increase in underlying EBIT to $4.5bn. This was largely driven by higher product prices and record iron ore sales. With seven Carbon Steel Materials projects in our pipeline, volume growth will continue to be delivered in all three commodities.
The underlying EBIT for Diamonds and Specialty Products decreased by $215 million to $345 million, mainly due to lower value material being produced at our EKATI diamond mine in Canada. While the lower diamond grades will continue to impact earnings from EKATI, in the medium term increasing production from the new Koala pit will help restore profitability.
As well, Cerro Matoso in Colombia had annual record production. The Yabulu expansion in Queensland, Australia is on track for delivery next year, however the budget and schedule for the Ravensthorpe nickel project in Western Australia is under review. The company is looking forward to increasing our overall production of nickel when Ravensthorpe comes on line but the reality is that cost pressures in the industry and low contract labour productivity have had an impact on progress. |
