BHP Billiton’s profit surge in its iron ore and coal divisions is expected to continue, with the world’s largest miner confident the recent increase in demand for its products will continue.

The commodity price slump hit the miner’s net profit hard but it was
its iron ore and metallurgical coal divisions that again enjoyed a jump
in earnings.

Chief executive Marius Kloppers said the company was pleased to report
production in its metallurgical coal division was virtually unchanged
on a year-on-year basis.

“Our long-term view has always been that these developing economies,
particularly India and China, overwhelm their natural endowment base,
so we positioned ourself for that some time ago,” he said.

He added that Brazil, India and China are going to be strong markets for the miner.

“In terms of our numbers, effectively our operations over the last
period have been running close to capacity,” Mr Kloppers said.

China has turned off some of its domestic coal supply but there is
concern it could turn it back on if prices keep increasing and have an
impact on the recent surge in demand that has benefited BHP’s exports
into the economic powerhouse.

But Mr Kloppers seemed confident the level of demand would continue. He
said the company views China as a large and sustainable market for
metallurgical coal over time.

In metallurgical coal, underlying EBIT jumped 402.8 per cent to
$US4.711bn. The company said the increase was mainly due to the higher
realised prices for hard coking coal (125 per cent), weak coking coal
(121 per cent) and thermal coal (17 per cent).

Its other bulk commodity, iron ore, reported an underlying EBIT of
$US6.229bn, an increase of 34.5 per cent. This was mainly driven by
higher average realised prices, which increased the underlying EBIT by
$US939million, it said.

The company added that 68 per cent of west Australian iron ore
shipments, on a wet metric tonne basis, were based on annually agreed
pricing.

Mr Kloppers would not be drawn on what the split between contract and
spot sales would be, as the miner has made no secret it favours an
index-based system.

“I can’t go beyond general comments that markets tend to go towards
more transparency over time,” he said. “Five years ago we first started
talking about that; iron ore seems to be starting to make the
transition to more transparency.”

Chinese production has scaled back as it was cheaper for steel mills to
import ore but there are concerns similar to those about coal, that
local producers could reopen and constrain any further increase in the
spot price.

“We have a view that the domestic iron ore production in China is
linked to the seaborne market and that really forms one market, with
the marginal limit of production generally coming from domestic Chinese
sources,” Mr Kloppers said.

Source: The Australian

Search to find what you want

• China s steel production to double by 2025: BHP Billiton

    Following a detailed 18 month internal study, the managing director of the world’s largest mining company says steel production in China is set to double by 2025. BHP Billiton chief, Marius Kloppers, has told the ABC’s Inside Business that he’s optimistic about commodity prices, especially for iron ore and coking

• Iron ore prices in the direction of greater transparency – BHP Billiton

    Iron-ore pricing is heading towards greater transparency, BHP Billiton CEO Marius Kloppers said last week. Kloppers told journalists in Johannesburg that steel-pricing dynamics had changed towards shorter contracts. In the seventies, many products, including oil, copper, aluminium and nickel, were sold on a benchmark-pricing basis. But, over time, the processing step

• Iron ore prices in the direction of greater transparency – BHP Billiton

    Iron-ore pricing is heading towards greater transparency, BHP Billiton CEO Marius Kloppers said last week. Kloppers told journalists in Johannesburg that steel-pricing dynamics had changed towards shorter contracts. In the seventies, many products, including oil, copper, aluminium and nickel, were sold on a benchmark-pricing basis. But, over time, the processing step

• BHP Chief Says will not return This Year

    BHP Billiton Ltd. Chief Executive Officer Marius Kloppers said global demand for metals won’t rise beyond what is required to rebuild stockpiles for the remainder of this year.  “We won’t see clean demand until early next year,” Kloppers, head of the world’s biggest mining company, told reporters in Johannesburg today. “Stocking

• BHP Chief Says \ u0026quot; Clean Demand \ u0026 # 39; will not return This Year

    BHP Billiton Ltd. Chief Executive Officer Marius Kloppers said global demand for metals won’t rise beyond what is required to rebuild stockpiles for the remainder of this year.  “We won’t see clean demand until early next year,” Kloppers, head of the world’s biggest mining company, told reporters in Johannesburg today. “Stocking

• BHP Chief Says \ u0026quot; Clean Demand \ u0026 # 39; will not return This Year

    BHP Billiton Ltd. Chief Executive Officer Marius Kloppers said global demand for metals won’t rise beyond what is required to rebuild stockpiles for the remainder of this year.  “We won’t see clean demand until early next year,” Kloppers, head of the world’s biggest mining company, told reporters in Johannesburg today. “Stocking

• The shortage drives big jump in prices for coking coal

    Queensland’s big wet has helped drive spot prices for the steel-making raw material coking coal to $US220 a tonne, opening up a $US13 billion ($14.4 billion) annual revenue gap on contract prices set almost a year ago when the global financial crisis was playing havoc with demand expectations. Australia’s coking

• Ore demand will be met, says Kloppers

    The big mining houses have the capacity to meet the world’s rising demand for fuels and ores in the coming decades, said BHP Billiton’s chief executive, as he played down fears ex-pressed by industrialising nations over “resources security”. But Marius Kloppers also underlined the scale of demand expected from fast-developing

• Deadline looms for BHP Billiton, Rio JV

    BHP Billiton Ltd and Rio Tinto Ltd are working around the clock to secure a binding agreement for their proposed $US116 billion ($A125.09 billion) iron ore joint venture in Western Australia by Saturday’s self-imposed deadline, according to insiders. The joint venture, which would combine the two companies’ iron ore operations

• Steel ministry wants 20% duty on iron ore exports

    The Steel Ministry is believed to have sought a 20 per cent duty on iron ore exports to discourage its shipments, which are primarily channelised to China, as part of its Budget recommendations. “It is recommended that to prevent unabashed export of iron ore and to conserve iron ore for

• From iron ore, coal exports to rise in Q4-09

    Australian Bureau of Agricultural and Resource Economics (ABARE) on Friday said country’s iron ore and coal exports hit record levels in the final quarter of last year thanks to strong demand from Asia. In a report, ABARE said iron ore exports reached 98 million tones and coal shipments passed 74

• BHP will not ink a new benchmark iron ore contracts

    BHP Billiton does not plan to sign any new benchmark contracts for its iron-ore production, CEO Marius Kloppers reiterated. The company will continue to negotiate annual prices for the production that remains under benchmark contracts, but will seek index-related contracts for new output that it brings online.

• BHP chief sitting on a goldmine, if his shares to pay off prices in the long run

    Marius Kloppers, chief executive of BHP Billiton, could receive a ?27.5 million windfall from his share bonuses if the world’s largest mining group meets its performance targets. BHP revealed yesterday that Mr Kloppers has earned 1.23 million shares over the past five years as part of his long-term incentive plan.

• Vale Jack up the ore price

    Pressure on iron ore prices ratcheted up with a report that the world’s biggest producer wants to increase the prices paid by its domestic steel customers by at least 80 per cent. Brazil’s Vale is planning to raise the price paid by Brazilian steelmakers by 40 per cent in March

• India: \ u0026quot; Spot prices for iron ore picks

    Indian iron ore miners have always shown a distinct preference for trade in the spot market rather than entering into yearly contracts with their clients on benchmark rates. This is despite the fact that for nearly four decades, the major part of the global iron ore trade is conducted on