BHP Billiton boss says that commodity prices have further to fall

By
1 mins. to read

The Chinese Shanghai Composite Index continued its precipitous decline yesterday, closing down over 1% at 2,065 – now 6% in the red for 2012 YTD and the lowest since March 2009.

The reason for the further falls was China Premier Wen Jiabao’s comments at the weekend pledging new measures aimed at stablising export growth perhaps meant that further monetary easing was off the table right now.

A weaker Chinese economy is bad news for commodity prices, with confirmation from Marius Kloppers, CEO of BHP Billiton that the company expects to see lower prices in the long term. Kloppers confirmed  “that prices will decline in the long term “across the product suite”. That is what we have assumed in our planning processes for the last couple of years and we see no reason to change that.” The company put the world’s largest open pit mine called Olympic Dam in South Australia on hold recently due to the uncertain future and the required $20 billion investment. BHP’s shares are down 3% in the last week to £19.24.

Last week, Australia’s resources minister, Martin Ferguson said that the country’s mining boom was at an end saying “It has got tougher in the last six to 12 months. Look at Europe, the state of the European and global economy. Think about the difficulties in China.”

Contrarian Investor UK

Comments (1)

Leave a Reply

Your email address will not be published. Required fields are marked *