Millie Munshi and Cris Valerio, Bloomberg
27 March 2007
BHP Billiton CEO Chip Goodyear said prices of copper, nickel and other metals will remain high for several decades as demand from China and India climbs.
"I'm excited about what we'll see over the next several decades as 2,5bn people in China and India and other parts of the developing world enter the world economy," Goodyear said on Sunday in an interview in Santiago. "Is China and India the next reason for a multidecade increase in commodity prices?
We're positive about that."
Metals prices surged to records in the past three years, boosting mining company profits, as construction soared in China, the world's fastest-growing major economy. Nickel, used in stainless steel, has more than doubled in the past year on speculation supplies from mines will trail demand. Melbourne-based BHP is the world's biggest mining company.
"The real driver in China is 15m people a year moving from a rural or agrarian economy to an urban economy," Goodyear said. "We don't see that ending for a long time. People are striving for a better way of life."
China's economy grew almost 11% last year, the fastest pace since 1995 and was the source of about a tenth of global growth. On March 17, the Beijing-based People's Bank of China raised interest rates for the third time in 11 months to slow growth.
"They've said they'd like to slow" the economy, Goodyear said. "But it's very difficult to see that happening in the near term."
A slowdown in the US economy won't hurt demand for metals, Goodyear said. He is in Chile for a copper conference.
"The fact is that the big drivers for commodity consumption in the world are taking place in other parts," he said. For "most of our commodities, the biggest consumer is China, not the US," he said.
A slowdown in residential construction cut metals demand in the US and shaved 1,16 percentage points off growth in the fourth quarter.
BHP will not change production plans on the basis of an economic slowdown in the US, Goodyear said.
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