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The world's biggest miner BHP Billiton on Wednesday said key market China was well on the road to economic recovery and would underpin a boom in resources demand in coming decades. Chief commercial officer Alberto Calderon said China's growth recovery was "gaining momentum" and the worst of the global downturn appeared to be over in the developed nations.
"China looks good, India looks OK, and with the OECD the worst is over, but how quickly it will get better is the question," Calderon said in a briefing to analysts. BHP expected global steel demand to double in 15 years, with China remaining a key market for iron ore, while demand growth for coking coal would come from both China and India, he said.
So far in 2009 China had jumped from producing 37 percent of the world's crude steel to 49 percent, said BHP analyst Vicky Binns. "By 2025 we believe Chinese and other emerging nations' demand could push seaborne iron ore demand up 250 percent from current levels," she said. India and China would underpin a boom in energy demand over the next two decades, said petroleum marketing chief Mike Henry, who predicted a surge of nearly 40 percent.
"Over the next two decades China and India alone will account for over half the world's incremental electricity demand," Henry said. BHP said stalled iron ore price talks had not resumed, and negotiations were yet to begin for 2010 rates. Marketing president Tom Schutte said BHP would happily move away from the benchmark system to indexed pricing over time, and predicted benchmarking days were numbered.
"The evolution to flexible, floating price mechanisms we believe is already happening," Schutte said. "We remain totally committed to implementing this across our suite of products as far as possible," he added. BHP has previously said more transparent iron ore pricing could help prevent situations such as the arrest of Rio Tinto executive Stern Hu in China on allegations of industrial espionage.
Hu, an Australian passport holder, was Rio's lead negotiator during this year's fraught benchmark talks, and his arrest was seen by some as a sign of China's frustrations with the negotiations. Rio, the world's second-largest producer of iron ore, has long been a backer of the decades-old benchmark system, under which the first price agreed between a miner and steelmaker becomes an industry standard for the next 12 months.
But Rio chief executive Tom Albanese warned last month that the system had to evolve "or it will break". It said on September 4 it had suspended the price talks with China following the arrest of Hu and three of his colleagues. The case has strained diplomatic relations between key trading partners Australia and China.

Copyright Agence France-Presse, 2009

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