Demand from China lifts BHP figuresPublished by MAC on 2006-07-26
Demand from China lifts BHP figures
By Raphael Minder in Sydney, Financial Times
26th July 2006
China's seemingly insatiable appetite for raw materials was highlighted yesterday by BHP Billiton's latest production figures, which showed the world's largest mining company boosting its metals production to record levels.
BHP Billiton yesterday reported record annual production of iron ore, aluminium, copper, nickel and natural gas. However, crude oil output fell, partly because its American facility in the Gulf of Mexico suffered hurricane damage last September.
Although the group did not provide any specific forecast for future production, BHP also reassured investors by saying that it was operating in a "strong demand environment".
The report comes as China, which has been leading demand for metals such as copper, announced earlier this month that its economy grew in the second quarter at 11.3 per cent, the strongest rate of growth in more than a decade.
BHP's share price gained 1.9 per cent to A$27.83 on the Australian stock exchange yesterday, leading a general share price climb among metals producers.
BHP also reported record output on a quarterly basis, with iron ore production climbing 3 per cent in the quarter that ended on June 30. Copper production rose 16 per cent in the same quarter, while nickel output climbed 31 per cent.
Analysts said BHP's report was particularly positive for iron ore. The company said its iron ore operations in Western Australia, a state that has become key to China's industrial expansion, achieved record annual and quarterly production.
BHP's figures followed a recent production report from rival Rio Tinto, which reported a 4 per cent rise in iron ore output in the quarter ending in June, also benefiting from better weather conditions.
The strong production report, however, comes amid increased volatility on the commodities markets as investors worry about whether the current boom in prices can be sustained.
There are also concerns about higher costs and whether miners can stick to agreed timetables to develop new sites and meet stronger demand from China and elsewhere.
BHP said yesterday that most of its projects were on track, with "some minor delays" expected in Australia. But it also warned that two of its projects worldwide - the Ravensthorpe nickel development in Western Australia and the Atlantis project in the Gulf of Mexico - would likely exceed approved budgets by more than 30 per cent.