Melbourne: BHP Billiton Ltd, the world’s biggest mining company based in Melbourne, said the rate of growth of the company’s sales to India is outpacing those to China because the country requires more coal and nickel to meet rising demand.
The company, whose prime businesses include mining, drilling and processing mineral resources, is raking in higher sales from India than it did six years ago from
China, which now accounts for a fifth of the its revenue, Marius Kloppers, incoming chief executive officer, said at a press conference in Melbourne.
Keeping track: But co says it’s glad it ended a pact with Posco because the Indian govt refused to allocate resources to the project
BHP is still looking to invest in bauxite and iron ore projects in India, he added.
The Union government plans to spend as much as $450 billion (Rs18.54 trillion) by 2012 to build new roads, ports and power stations, and accelerate economic growth to 10% from an average 8.6% in the past four years.
On 22 August, BHP officials had said the company has as much as $50 billion of projects on hand.
“Everybody in the industry missed the Chinese growth story, and what BHP is doing now is to set themselves up for the next stage when India could go on the same growth path,” said Mark Pervan, a commodity strategist at Australia and New Zealand Banking Group Ltd (ANZ) in Melbourne.
“They’ve built the business for Chinese demand, and what they want to do with the $50 billion of projects is to prepare for the new emerging economies like India,” he added.
The company’s shares fell as much as A94 cents (Rs31.45), or 2.5%, to close at A$36.76 on the Australian Securities Exchange, in Sydney on Friday. The company’s shares gained 6.5% on Thursday, after posting its eighth consecutive record half-yearly profit on 22 August.
BHP’s total sales have jumped to $47.5 billion this year, from $17.8 billion in 2002, and $19.1 billion in 2001, when the company was created from the merger of BHP Ltd and Billiton Plc.
China, the world’s largest consumer of metals and fastest growing economy, will continue to want more metals and iron ore, Kloppers said.
India, the world’s second fastest growing economy, will need energy commodities such as coal, as well as metals, he added.
“This is a larger portion of the globe industrializing than before,” said Kloppers.
“It’s not one economy, but two economies. We’re pushing into India extremely aggressively in selling products there,” he added.
BHP Billiton pulled out of a partnership with South Korea’s Posco, Asia’s third largest steel maker, to invest in a $12 billion steel and iron ore venture in Orissa in 2005.
BHP is “very glad” it dropped out of the partnership with the South Korean company because the Indian government refused to allocate resources to the project and that has hampered development, said outgoing chief executive officer Charles Goodyear, at the same conference.
“The amount of resources they will allocate doesn’t allow for the efficient operation of that mine,” said Goodyear. “We determine it won’t be profitable for us to create a resource that’s not competitive in a global market. Posco since has been trying very hard to get access to land and resources,” he added.