BHP warns of cooling market in commodities
BHP BILLITON said yesterday it expects commodity markets to cool further and that investors have lost confidence in the longer-term health of the global economy, in the most cautious comments yet from the world’s biggest miner.
BHP also put the brakes on a plan announced by chief executive Marius Kloppers in 2011 to spend $80bn (£50.2bn) over five years to expand its iron ore, coal, energy and base metals divisions, banking on continuing high demand from its main market, China.
“It is all about appropriate allocation of capital. When Marius (Kloppers) talked about the $80bn, the environment was different,” chairman Jacques Nasser said yesterday.
“We should pause, take a deep breath and wait and see where the pieces fall around the world,” he said, stopping short of announcing a spending cut.
The company was re-thinking its expansion plans “every day,” he said.
Asked if BHP would spend $80bn over five years, he replied: “No.”
BHP made close to $10bn in first-half profit before exceptional items.
That was largely due to BHP’s profitable iron ore business, a strength that it shares with its main rival, Rio Tinto, which unveiled a $3.4bn expansion of its Australian iron ore mines in February.
Outside of iron ore, Nasser said plans to invest billions of dollars beefing up the company’s Olympic Dam copper and uranium mine in Australia were still subject to a board decision later this year.