BHPB mulls iron ore production cuts as prices fluctuate

Monday, 13 Feb 2012

AFP reported that BHP Billiton warned that it could scale back production at unprofitable operations as commodity prices softened due to economic uncertainty.

Mr Marius Kloppers CEO of global mining giant BHP Billiton at a press conference in Sydney said that its flagship iron ore business was in good health despite weakening Chinese demand and insisted it would take a fairly big event to knock expansion plans worth AUD 27 billion.

He told ABC television “I think a more immediate problem is that given some of those price movements that you've seen, not all of our operations are making profit to the same extent at the moment.”

He said “That's probably more the avenue that you're going to see us act in, where an existing operation doesn't make profit, we're probably likely to say 'look this is not making profit, let's curtail production.”

BHP posted a 5.5% fall in first half profits last week to USD 9.4 billion, largely due to volatility in commodity prices and Mr Kloppers said iron ore had clearly moderated a little bit as China cooled.

However, Mr Kloppers said freight costs from Australia's resource rich west coast to China were as low as they've ever been and iron ore shipments would be very profitable "even if that price comes back a little bit more.

(Sourced from AFP)