BHP ceo defends iron ore strategy again

BHP Billiton ceo Andrew Mackenzie reaffirmed the company’s stance on iron ore production, saying low prices should not come as a surprise in the commodities industry.

Paragraph entered by Atlantic migration, in order for SteelFirst articles to display correctly on Metal Bulletin.

“It is unproductive for Australia to cut or stall low cost and profitable supply when the cycle drops. It destroys value, penalises shareholders, customers and employees and disrupts the power of open markets,” he said in a speech at Minerals Council of Australia in Canberra on Wednesday June 3.

“It is these markets that induce investment, during times of higher prices, and reduce investment during times of lower prices which is exactly what we have done in our Western Australia iron ore business,” Mackenzie added.

His comments come in the aftermath of a public debate where Fortescue Metals Group (FMG) chariman Andrew Forrest, claimed that BHP and Rio Tinto deliberately flooded the iron ore market “at the cost of the Australian economy”.

The Australian government later said it would not go ahead with an inquiry into the industry as lobbied for by Forrest.

Supply growth is “the function of many countries and companies competing to meet global demand” and what has been seen in iron ore prices over the past year is no different from many other commodities in recent years, Mackenzie said.

Metal Bulletin’s 62% Fe iron ore index stood at $63.02 per tonne on Tuesday June 2, down more than 12% since the start of the year. Prices are half the value they were at the start of 2014.

While the executive acknowledged that oversupply in iron ore may persist for some time as miners lifted production during periods of higher prices, he was “optimistic” for the future.

“With each cycle, demand is greater than the previous one – and continue to rise,” Mackenzie said.

Last month, BHP said it would cut the unit costs of its Western Australia iron ore business to $16 per tonne during the 2016 financial year, down 21% from levels in the half year ended December 31.

What to read next
Fastmarkets proposes to extend the shipment window of its alumina index inferred, fob Brazil, to allow for greater inclusion of reported liquidity, and to increase the frequency of publication to weekly.
Following a month-long consultation period, Fastmarkets has amended the methodology for the bi-weekly assessment of the aluminium P1020A main Japanese ports (MJP) spot premium, to include domestic tenders and deals from the Japanese market.
Fastmarkets proposes to discontinue its ferrous scrap consumer buying price for cast iron borings in Pittsburgh due to a lack of liquidity.
Fastmarkets is proposing a realignment of its consumer buying price for ferrous scrap No1 busheling in Cincinnati and Pittsburgh, effective from the May 2023 monthly settlement.
A drive by electric vehicle (EV) manufacturers to improve the affordability of their cars may upend an expectation by some market observers that future EV dominance of automotive production will sharply reduce demand for special bar quality (SBQ) steel
The publication of Fastmarkets’ US rebar prices took place earlier than scheduled on Wednesday March 22 due to a reviewer error.
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
Proceed