/ 22 October 2004

BHP Billiton trusts in China

Global resources group BHP Billiton expects the demand for commodities in China to be sustainable over the long-term, BHP Billiton CEO Chip Goodyear said on Friday at the group’s annual general meeting.

It is reasonable to assume the economic development of China will follow that of other developed economies to some degree, with the additional factor of a huge number of consumers, he added.

“Having said that, China, as with any economy, will have bumps and bruises along the way. It is critical that a company like ours maintains a low-cost operating position and a strong capital structure to ensure we are able to benefit, even during inevitable periods of softness,” Goodyear said.

BHP Billiton chairperson Don Argus said the performance of the global economy is near three-decade highs with strong activity and low inflation.

“Strong demand growth in the United States and China has had flow on affects to the rest of the world. Europe, Japan and Asia have all been beneficiaries of the improvement in global trade, while commodity-producing nations have benefited from stronger prices,” Argus said.

However, recent indicators point to an easing in growth across the world; as monetary and fiscal policies are tightened, there is slowing in economic activity in China from the frenetic pace of earlier in the year, and high oil prices begin to affect spending, he added.

Nevertheless — providing countries can successfully manage these headwinds — a growing global economy, in particular the ongoing development of China, India and other key emerging economies, continues to support the near-term outlook for commodities, Argus said.

BHP Billiton expects capital expenditure of about $4-billion during its 2005 financial year ending June next year, including $2,4-billion on growth project development and $450-million on exploration.

“This is more than we’ve spent in any annual period in our history,” Goodyear said.

In addition to China, BHP Billiton will be watching the potential development of economies such as India and Brazil, where there are large population bases capable of having a significant impact on the supply and demand equation for commodities. — I-Net Bridge