Top Australian miner BHP says global trade tensions are exacerbating the extreme economic uncertainty caused by the coronavirus crisis and clouding the market outlook for some of the nation’s valuable commodity exports.
Addressing the miner’s annual investor meeting on Wednesday night, BHP chief Mike Henry provided his latest forecasts about the severity of the pandemic’s potentially longer-term hit, warning the global economy “will take some time to stabilise and recover”.
“Given the variable nature of the pace and structure of the recovery around the world, and exacerbated by global trade tensions, the outlook for commodity markets remains uncertain,” he said.
“However, the strength and consistency of the economic recovery underway in China does provide a measure of confidence and optimism.”
Mr Henry did not discuss specific trade tensions but his comments come amid fresh fears about Australian coal shipments being targeted in China with reports of authorities verbally warning state-owned power utilities and steel mills to stop importing Australian product. BHP is Australia’s biggest exporter of metallurgical coal, the kind of coal used in steelmaking.
Exports of thermal coal – used in power generation – have been badly affected this year by the pandemic-driven drain on energy demand and Chinese government policies to avoid seaborne cargoes. While unofficial limits are often imposed in China as a way to support its domestic mining industry, a deterioration of diplomatic relations between Canberra and Beijing over calls for a coronavirus inquiry was attributed to the Chinese government’s decision to instruct utilities to avoid Australian coal in particular.
BHP in August posted a underlying profit of $US9.1 billion ($12.6 billion) for the full financial year on the back of sky-high prices of the steelmaking ingredient iron ore, its most lucrative commodity and Australia’s top export.
Providing a windfall for the federal budget, the iron ore price has defied predictions it is overdue for a fall and has surged above $US120 a tonne amid robust demand from Chinese steel mills and softer output from other exporting nations, such as Brazil, which has faced COVID-19 disruptions.
However, the markets for other BHP commodities such as copper, petroleum and coal have been dragged down by various impacts of COVID-19 curtailing mining operations and demand and are facing an uncertain outlook.
Mr Henry said BHP’s strong performance over the past year navigating unprecedented challenges posed by COVID-19 and achieving record production volumes across some operations illustrated the “resilience of our portfolio, balance sheet, people and relationships”.
He said the business was well-positioned to weather the uncertainty and to emerge from COVID-19 “stronger, faster-paced and more focused”.
“These are deeply uncertain times for the world and are likely to continue for some time,” he said. “The way our people have stepped up to meet these challenges has been truly inspiring.”
BHP narrowly avoided facing a shareholder vote on Wednesday calling for a moratorium on works threatening to “disturb, destroy or desecrate” culturally significant Indigenous sites in the Pilbara following Rio Tinto’s disastrous destruction of the 46,000-year-old Juukan Gorge rock shelters this year.
Investors were due to vote on the motion, but it was withdrawn in the lead-up to the meeting after BHP reached an agreement with a coalition of 20 Indigenous representative groups. BHP said it would improve its processes around obtaining traditional owners’ consent to development works on their ancestral land, publicly support reforms to state and federal heritage legislation and commit to a range of other measures to empower traditional owners.
Demands for legal reforms and greater rights for traditional owners to safeguard sacred sites have been spreading across the Pilbara mining heartland in recent months in the wake of the Rio Tinto disaster. BHP has halted plans to destroy up to 40 significant Aboriginal sites at its $4.6 billion South Flank iron ore project and vowed to re-consult with traditional owners, the Banjima people.
Source: Thanks smh.com