BHP bracing for the journey ahead

BHP Billiton Ltd shareholders wait in a refreshment area ahead of the company's annual general meeting in London, UK, on Oct 23,2014.The world's biggest mining firm told investors that first-quarter iron ore output rose 17 percent as it continues to expand production in the face of tumbling prices. [Photo/China Daily]

BHP has already factored market changes in China, says top executive

December is normally associated with celebrating achievements and chalking out action plans for the year ahead. But for Andrew Mackenzie, the chief executive officer of mining giant BHP Billiton Ltd, December was the culmination of an eventful journey as it shipped its one-billionth metric ton of iron ore to China.

Though the sheer volume of the shipments made over the last four decades would enthrall most chief executives, Mackenzie is more pragmatic when he says that it is also a time of introspection due to the changing market realities in China.

"There is no doubt that China is of utmost importance to BHP Billiton and we are looking to develop closer ties with the Asian nation and to contribute to its development by providing long-term, reliable and high-quality products at a transparent market price," said Mackenzie.

"It took us just 12 years to ship 900 million metric tons of iron ore, but it took us nearly 30 years to do the first 100 million," he said, adding that judging by current levels BHP Billiton is well on track to do the next billion in five or six years.

The Anglo-Australian mining giant shipped nearly 70 percent of the iron ore produced from its mines in Australia to China during the last financial year, according to its annual report.

"Demand for iron ore from China's huge steel industry has been unprecedented and has helped buoy iron ore shipments."

It has also been a pivot in bilateral trade between China and Australia, said Mackenzie.

China accounts for about half of global crude steel output, and its strength in steelmaking and manufacturing ensures that most of the iron ore that Australia exports to China returns in the form of high-quality infrastructure and equipment.

Since 2008, BHP Billiton has spent some $4 billion on purchasing capital goods and consumables from China for its facilities in Australia, including made-in-China equipment and infrastructure such as machines for bulk handling, transportable buildings and rolling stock for rail transposition, said Mackenzie.

"Most of the infrastructure for the new Jimblebar mine was actually fabricated in China. It was shipped to Port Hedland in Western Australia, and then onwards to the final destination by road, for construction and erection," he said.