BHP chief executive Mike Henry. Image: BHP
BHP remains optimistic about the trade tensions between Australia and China, as iron ore miners continue to feel the pinch of reduced commodity prices.
Iron ore prices sat just over $US120 ($164) per tonne of 62 per cent iron ore at the end of last week, well below the prices reached in mid-July this year, when they topped $US200 per tonne.
BHP chief executive officer Mike Henry spoke at the Financial Times Mining Summit last week, explaining his optimism at China’s overarching strategy of growth and development and how that will benefit BHP going forward.
“If we take a step back, if you look at overall Chinese policy, it remains pro-growth,” Henry said.
“That is being disrupted somewhat by sector-specific measures in the near term, but end-use demand into machinery, consumer goods, exports and so on remains reasonably strong. We expect that will continue to be the case into calendar year 2022.”
Henry said a demand in housing construction provides hope amidst a tumultuous situation.
“I use the housing industry as one example. On the one hand, we are seeing pressure on housing starts, which will then impact on near-term steel demand,” he said.
“On the other hand, activity on work underway remains very strong, and we are starting to see the pull-through to housing completions, which of course is going to bode well for copper demand.”
BHP remains steadfast about the situation between Australia and China, with the latter’s constant growth mindset a reason to stay positive.
“Our long-term outlook for China, with continuing strong growth there, has not really changed,” Henry said.
“The big-picture outlook for commodities remains really healthy both in China and globally, where we are starting to see a bit of a pick-up in inflation, as well, which has been spoken about.
“Resources companies like BHP are right at the front end of that, and we are benefiting from that through prices for pretty much all of our commodities at this point.”
Mining companies concerned about the continued instability between the two nations must remain vigilant, Henry says, and continue communicating with their Chinese allies.
“In the near term we need to ensure that we are doubling-down on our engagement with our counterparts in China, both customers and suppliers, and looking at how we can collaborate ever more strongly.”
The slumping iron ore prices have claimed four Australian iron ore mines in the last month, with Venture Minerals, GWR Group, Indus Mining and Mount Gibson calling a halt to operations at their respective mines.