Marius Kloppers, BHP Billiton chief executive, on Thursday insisted the Anglo-Australian mining had no plans to cut iron ore production despite warning that recent Chinese steel production was down 17 per cent year-on-year.
“We have not seen that impact yet on our shift volumes but if that situation persists we cannot expected to escape scott free,” he told shareholders at the group’s annual general meeting in Melbourne on Thursday.
He said BHP would inform the stock exchange immediately if there were any reduction in volumes “of a material nature”.
BHP this week abandoned its more than year-long pursuit of Rio Tinto, valued at $62bn earlier this month, citing difficult market conditions brought on by the global credit crisis.
Vale of Brazil, Rio and a number of other smaller iron ore miners in Australia have cut production by 10 per cent or more in response to the sharp downturn in demand from steelmaking customers in China and elsewhere.
However, BHP said it was in better shape than all of its rivals to deal with the “volatile and challenging global conditions”.
Don Argus, chairman, said BHP believed demand for metals, driven by the growth fundamentals from emerging economies, would be robust in the long term
”We have not changed our view of the basic industrial logic of the combination [with Rio], or of the longer term prospects for natural resource demand growth driven by emerging economies, particularly China,” he said.
BHP also stressed its strong balance sheet and low net debt of $6.3bn.
”We believe we are in a better position than any other major mining company to deal with these uncertain times,” Mr Argus said.
Evy Hambro, head of the BlackRock World Mining Fund, said the collapse of the Rio bid meant BHP must be under pressure to explain itself to investors.
“They need to outline a strategy that allows investors to have a good understanding of how they are going to make the most of their enviable balance sheet,” he said, adding BHP was in a strong position to acquire assets given the rapid fall in the vale of mining assets in recent months.
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