No upside soon in iron ore, says BHP

BHP Billiton chairman Jac Nasser says he does not expect any significant increase in iron ore prices soon, following a year of heavy falls in Australia’s biggest export earner.He also told shareholders at the company’s annual general meeting in Sydney that China’s growth rate would not continue at the same pace, but that was expected.A more sustainable rate would follow in line with how other major economies have developed.The company was also committed to a succession process for when chief executive Marius Kloppers departs, which it recently told the ASX it had started.

BHP Billiton has told shareholders that prices for its biggest earner, iron ore, will not improve any time soon. However, it said, it had a uniquely diversified resources portfolio also comprising oil and gas, as well as minerals that had protected profits in a difficult year.Chief executive Marius Kloppers told the AGM that BHP was investing through the cycle to prepare for a future when China was interested in consumer goods more than iron ore and steel for its new cities and buildings.

Mr Kloppers and the company have been criticised after near-$US3 billion write-downs on its US shale assets this year. The company had capital and exploration expenditure of $US22 billion in the 2013 financial year, he said.

“This commitment of continued investment throughout the cycle is one of the key elements of our broader strategy that sets us apart from our peers,” he said. “In fact, we now have a total of 19 predominantly brownfield projects that are on-budget and on-schedule, with the majority delivering first production before the end of the 2015 financial year.”

“The completion of these projects and the release of latent capacity in Escondida, Queensland Coal and the Gulf of Mexico as they recover from those temporary production issues, will underpin a compound annual volume growth rate of around 10 per cent this year and next.”

Mr Nasser said the company was committed to a succession process, having hired a global search firm to find a replacement for when chief executive Marius Kloppers departs.