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China, India will sustain global economy
Updated: 2004-10-24 11:02

Rising oil prices are slowing growth across the world but key emerging economies such as China and India will continue to support the near-term outlook for commodities, the world's largest mining company said Friday.

BHP Billiton chairman Don Argus told the company's annual general meeting in Sydney that strong demand growth in the United States and China had flow-on effects on the rest of the world.

"Europe, Japan and Asia have all been beneficiaries of the improvement in global trade, while commodity-producing nations have benefited from stronger prices," Argus said.

He said indicators had more recently pointed to an easing in growth across the world as monetary and fiscal policies were tightened.

As well, there were indications of a slowing in economic activity in China from the frenetic pace of earlier in the year, while high oil prices would affect spending throughout the world.

"Nevertheless, providing countries can successfully manage these headwinds, a growing global economy, in particular the ongoing development of China, India and other key emerging economies, continues to support the near term outlook for commodities," he said.

He predicted that the dual-listed Anglo-Australian group would continue to build on the success which saw it boost net profit 83 percent to 3.5 billion US dollars in the year to June and achieve a 21.4 percent return on capital.

BHP Billiton chief executive Chip Goodyear told the meeting that in the June 2005 fiscal year the group expected capital expenditure to be around 4.0 billion US dollars, a record.

It would include 2.4 billion US dollars for project development and 450 million US dollars for exploration.

"This is more than we've spent in any annual period in our history," Goodyear said.

He said there were 24 projects in the project portfolio now being developed or having their feasibility studied, representing approximately 8.6 billion US dollars in growth expenditure over the next three and a half years.

The projects include oil and gas developments as well as copper, nickel, alumina and iron ore expansions.

Goodyear said the expansions and new developments are being made to match growing demand but the investment criteria mean they must deliver acceptable returns even during cyclical downturns.

He said China's outlook was particularly heartening. "We believe the demand for commodities in China is sustainable over the long term ... with bumps and bruises along the way," he added.

BHP Billiton was also watching potential development of other economies with large population bases, such as India and Brazil, he said.

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