Author: Paul Ploumis06 Jun 2014 Last updated at 07:39:48 GMT
CANBERRA (Scrap Monster): BHP Billiton extended its iron ore production too quickly, which made the Anglo-Australian miner to ignore the underlying growth of its overall business, said its chief executive.
But, Andrew Mackenzie added that despite the issues of over production of iron ore, there was enough demand coming back from China and other places to balance the company’s increased capacity. BHP, Rio Tinto and Vale have produced more due to the sustained increase in demand from
China, by increasing the capacity and seaborne supplies.
But due to the weak Chinese economic growth, the ever weakest in last 23 years, has sparked the warnings of the global oversupply and long term price declination. BHP Billiton is all set to increase its net annual production to around 260 to 270 million tonnes, which up from a planned proportion of 217 million tonnes in 2014.
Due to excess iron ore, the prices have dropped down by 30 percent this year, which is lowest since September 2012. But, Mackenzie said that the company’s low production cost would make it easier for the firm to withstand the downturn. He added that they were very strongly competitive at prices much lower than today’s prices.
Chinese iron ore imports have increased by 20.65 per cent to 305.3 million tonnes in the first four months of the year. Australian producers have been the main beneficiary, with shipments rose by 35.4 per cent. Australia's share of Chinese net imports increased to 54 per cent over the period, up from 50.9 per cent of 2013.