Monday, February 21,
Top global miner BHP Billiton’s, chief executive sees iron ore prices staying strong for as long as two years, and is confident the company’s profit margins will remain robust, even as costs escalate.*
Marius Kloppers was bullish on the near-term outlook for iron ore prices due to supply constraints, with India not exporting and rivals having held back investment in new capacity during the global financial crisis.
“Simply put, over the next 12, 18 months, perhaps two years, there’s not a substantial amount of new capacity coming on, and it’s more an issue of the supply side rather than the demand side,” he said.
His counterpart at rival Rio Tinto was more specific a week ago, forecasting that tight supplies would keep iron ore prices high in the near term, but prices would fall below $100 a tonne from current record highs around $190 a tonne when mine expansions are completed in 2014 and 2015.
BHP announced this week it would spend $80 billion on mine developments and expansions over the next five years, and Kloppers said based on expected returns on those projects, it should be able to post compound growth of 5-6 percent a year for “many many years”.
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