Mining giant BHP Billiton says it doesn’t expect commodity prices to recover in the short term, blaming increased supply for weaker prices.
Releasing its annual report today, company chairman Jac Nasser said a drop off of investment across the resources sector will result in more balanced markets.
"We maintain a positive outlook over the long term as the fundamentals of wealth creation, demographics and urbanisation continue to create demand for commodities across Asia and other markets," Nasser said.
He said a slowdown in China coupled with increased supply is exerting downward pressure on commodity markets, and highlighted the need to strengthen productivity.
“All resources companies will need to improve productivity and be flexible enough to adapt to change in this more challenging market,” Nasser said.
Looking ahead the miner said it expects its production volumes to grow at a lower unit cost and reinforced the company’s focus on potash.
BHP recently invested a further $US2.6 billion into its Canadian Jansen potash project.
"A growing population and improving incomes in emerging economies means the longer-term outlook for potash, a fertiliser that improves the yield and quality of agricultural production, is strong," Nasser said.
The miner’s net profit took a 30 per cent hit to post $US10.9 billion for the 2013 financial year.
Nasser said the company performed well in a volatile and uncertain year for mining.
BHP chief executive Andrew Mackenzie said the results reflect record production and productivity gains.
The company also offloaded a number of assets this year including its diamonds business, and the Yeelirrie uranium deposit in WA. The divestment program totalled $US6.5 billion for the year.
On the safety front, the company lost three employees at work during the year.
“This is clearly unacceptable,” Mackenzie said.
“Eliminating risk is a critical, continual focus.
“The health, safety and wellbeing of our people is our primary responsibility.”