Iron ore prices have taken a flogging over the past fortnight, but BHP Billiton hasn’t lost any confidence according to long term projections released at the AJM Global Iron Ore and Steel Forecast conference today.
Poor prices for iron ore in recent days have sent investors fleeing from the market, with BHP stocks down 4.1 per cent overnight, dragging the share price down to $36.16.
Outlining BHP Billiton’s focus on productivity and capital efficient bottlenecking, iron ore president Jimmy Wilson reiterated the company’s view of the market and the value-delivering capability of the Western Australian business.
“Our market outlook is for continued strong steel demand growth over the next 10 years,” Wilson said.
“Our view that Chinese crude steel production is expected to peak at 1.1 billion tonnes, around 2025, is unchanged.
“We remain confident that global demand for iron ore will continue to grow, though at a more moderate rate, driven by urbanisation and industrialisation.
Market analysts have suggested that investment by iron ore miners in Australia and Brazil in expanding production for the Chinese market is now resulting in gaps between supply and demand, which will affect resource prices over the next two years.
Wilson also said the company has undergone a full review of the supply chain across mines, rail and port, with focus on equipment availability, utilisation and operating rate, followed by low-cost debottlenecking initiatives.
“Across our mines we have realised significant productivity improvements that have resulted in increased shovel, truck and ore handling plant availability and utilisation. Where appropriate, we have also installed relocatable crushers to increase high margin volumes,” Wilson said.
“Our Iron Ore business is well positioned to deliver high margin volume growth at a lower cost without the need for an additional mining hub or major port and rail infrastructure.”
BHP Billiton is now planning to expand Jimblebar production to 55 million tonnes per annum (mtpa), as well as debottlenecking of the supply chain, to deliver capital efficient growth towards 270 mtpa.