BHP Billiton boss Marius Kloppers has urged caution when assessing the mining industry’s strength in the immediate future.
“We remain cautious about the speed and strength of the economic recovery across the developed world, despite the positive momentum in the developing countries,” he said.
Kloppers’ comments came after BHP yesterday revealed a first-half year profit of $5.7 billion, a significant step up from the $5.1 billion widely predicted by analysts.
Despite being a major increase on US$2.6 billion profit the company posted at the same time last year, the latest result was BHP’s lowest first-half profit in four years.
Kloppers said that although he remains confident of “robust” long term growth due to continued industrialisation in both China and India, he has concerns regarding the immediate future.
“Stimulus measures that supported the recovery have not fully addressed structural issues such as weak labour markets and excess production capacity in developed economies,” he said.
Kloppers also recommended yesterday a level of “fiscal stability” in Australia’s resource industry, alluding to a potential change in state-based royalties to a resources rent tax.
He said this stability is key to an industry so fundamental to the country’s economic growth.
Mining companies have an expectation that things are not going to change throughout the life of their assets that have attracted international and domestic investment in the first place, he said.
“This is an extraordinarily important thing.”