BHP Billiton says Australia coal expansions hard to justify
(Reuters) - Global miner BHP Billiton (BHP.AX) warned on Wednesday that cost pressures and a strong Australian dollar were making it hard to justify expanding its coal operations in Australia, with coal prices unlikely to get back to record levels.
"While our resource base in Queensland is very high quality, the heavy cost of taxes, royalties, declining productivity and a strong Australian dollar means that further investment to grow these operations is much less likely," BHP CEO Marius Kloppers said in notes for a speech in Brisbane.
BHP, the world's top exporter of metallurgical coal used in steelmaking, suffered a drop in coal output in the year to June as workers at its Queensland mines staged periodic stoppages amid an 18-month dispute over pay and conditions only recently resolved.
Last month it suffered another blow, when the Queensland state government hiked royalty rates on coal.
The increase was announced despite coal miners' recent moves to cut jobs, costs and expansion plans in Queensland, including BHP's decision to delay its Peak Downs coking coal project.
Kloppers urged Australia's state and federal governments to work with companies to make the mining industry more competitive as it wrestles with cost hikes and higher taxes and royalties that have crunched profits.
BHP has been flagging for several months that demand growth in China for steel making materials would slow over the next few years and now sees China's economy growing at 7-8 percent this year and around that level over the next 10 years.
"In effect, what this means is that the record prices we experienced over the past decade, driven by the 'demand shock', will not be there to support returns over the next 10 years," Kloppers said.
The global iron ore market is expected to grow by 650 million tonnes this decade, he said, below the 800 million tonne rise recorded in the previous decade.
- Malaysian plane still missing; questions over false IDs |
- CORRECTED-UPDATE 4-Malaysia Airlines plane crashes in South China Sea with 239 people aboard - report
- China draws 'red line' on North Korea, says won't allow war on peninsula
- Warning shots fired to turn monitors back from Crimea |
- Malaysian plane crashed off Vietnam coast: state media