BHP Billiton chief executive Marius Kloppers has signalled the group will pursue steady growth in its Pilbara iron ore business, and dismissed suggestions the industry will turn to Africa for future expansion.
He also continued to be non-committal about the timing of its planned outer harbour project at Port Hedland, which is needed to underpin long-term growth in the Pilbara.
Mr Kloppers said the group had about 6,000 people working on expansion projects in the Pilbara, and he favoured staying around that level.
“Probably the most optimal solution is to keep a stable rate of employment rather than very lumpy,” he told journalists after a business breakfast in Perth.
“That means you can redeploy people and keep it at a stable rate.”
Mr Kloppers said the group would continue to invest in a range of growth projects in the region, including the construction of new facilities at Port Hedland’s heavily-used inner harbour.
“Filling up the inner harbour is extraordinarily important.
“Maintaining our options on the outer harbor and continuing to advance them is also extraordinarily important.
“We are reluctant to call the exact date on which we will take big incremental steps.
“We don’t need to do that at the moment because we have the workforce building RGP5, RGP6, shiploaders, and so on.”
Mr Kloppers said future movements in the iron ore price would have a bearing on the decision, but declined to be drawn on where he saw iron ore prices heading.
He also reaffirmed BHP’s disinterest in west Africa, which is seen by many as the world’s next big iron province.
“West Africa is not needed to supply the world for years.
“We have been unequivocal that, given the fiscal terms available there, the risk, the costs and so on, our belief is that Brazil and Australia will effectively supply the market.
“We are now more convinced that we are right, rather than wrong.
“My sense is that the Brazilians ….. are starting to think more like us on west Africa.
“Rio (Tinto), it feels to me, is still in a slightly different space.”
Mr Kloppers also indicated that the group would retain its nickel business in WA, contrary to speculation it was up for sale.
He said diamonds and titanium were the only businesses it was planning to exit.
“From a total industry exit, those two are the only things that we have on the screen for now.
“It took us years of positioning with shareholders that they were sub-scale, so there was no surprise; you’ve not seen us do the same thing with nickel.”
He set a challenge for the management team in Perth, led by Glenn Kellow, who has taken the newly formed position of president aluminium and nickel.
“What Glenn has to do here in Perth essentially is to run a business in aluminium and nickel which is not going to be allocated any growth capital, which has to cut its costs, and from an overall context pretend they are in the ‘90s in order to get that cost competitive.
“Every indication I’ve had is that they are doing just that.”
Commentng on broader economic issues, Mr Kloppers said the biggest challenge facing the company and the mining sector as a whole was labour mobility.
"Labour mobility is probably, long term, as important as labour productivity," he said.
He also indicated that the high cost of living in Western Australia was another impediment to attracting workers.
A cup of coffee in WA had set him back $5.20, which was 150 per cent more expensive than in London, he said.
