BHP CEO says bearish on iron ore price, though still profitable

BHP CEO says bearish on iron ore price, though still profitable

MELBOURNE, March 16 (Reuters) – BHP Billiton BHP.AXBLT.L Chief Executive Andrew Mackenzie on Wednesday said the world’s biggest miner sees iron ore prices falling, with oversupply set to keep them “lower for longer”.

“We’re relatively bearish about the iron ore price, probably more bearish about the iron ore price than the price of any other commodity that has come to be part of the BHP Billiton portfolio,” Mackenzie said at a business conference in Melbourne.

New supply would continue to be added as cost-cutting meant miners were still profitable, but supply would outpace demand growth as the Chinese economy shifts away from heavy industry, he said.

“And therefore we think ultimately that excess of supply will drive prices lower than, say, where they are currently,” he said.

Iron ore prices have jumped 30 percent this year from a low of $39.30, defying most forecasts for weakening prices in 2016 due to low-cost supply from Australia and Brazil and weaker steel demand from China.

Mackenzie also said BHP has the financial flexibility to chase deals, but can also grow without acquisitions. He reiterated it would focus on its core businesses of iron ore, copper, oil and metallurgical coal, and possibly potash down the track.

Minor commodities like lithium and graphite, which have strong growth prospects in the battery sector, did not offer the scale that BHP wants, he said.

(Reporting by Sonali Paul; Editing by Stephen Coates)