BHP chief executive Andrew Mackenzie says the resources giant has not been significantly impacted by rising trade tensions, but predicted countries outside of the battle between the United States and China will take action to protect the global trading system.
Speaking at the company’s London annual shareholder meeting on Wednesday evening, Mr Mackenzie said BHP was watching the current trade tensions closely for impacts on global economic growth and commodities demand.
“We all know that protectionism has negative flow-on effects for business. It undercuts confidence, disrupts investment, and destroys productivity, which is the biggest driver of job and wealth creation and the eradication of poverty,” he said in his address.
“Hence, I expect that the current assault on the global trading system will jolt countries outside of this dispute into action. This is not a time for complacency. When the fabric of global trade frays, we must pull together and administer needle and thread.”
But Mr Mackenzie said that “despite the escalation in trade tensions, our business has not been significantly impacted” and predicted BHP would benefit from the global move towards what he described as a “lower carbon future”.
“Populations are on the rise in the developing world. More people will live in cities and expect a better quality of life through better infrastructure, decarbonisation and electrification.
“This will trigger demand for energy, metals and fertilisers for decades to come. Renewables, electrification and a low-carbon future offer great opportunities for BHP.
“They will generate demand for higher volume, as well as higher quality, iron ore, metallurgical coal and copper concentrates – the products our portfolio is built around.”
Neither Mr Mackenzie or BHP chairman Ken MacKenzie provided investors with any further clues as to how the company plans to return the proceeds from its $US10.8 billion sale of its shale assets in the United States.
Mr MacKenzie confirmed that a working group of board and management examining the company’s capital allocation framework had been disbanded after completing its work. He said the company’s strong balance sheet and performance had given the board confidence to pay $US6.3 billion of dividends in the 2018 financial year.
“I want to assure you that your board and management team will continue to make these types of transparent, disciplined decisions to maximise value and returns for our shareholders,” Mr MacKenzie said.
The upbeat global view came after BHP had earlier on Wednesday cut its copper production target for fiscal 2018 by about 3 per cent, after mines in South Australia and Chile suffered unplanned outages during the September quarter.
BHP’s flagship iron ore division delivered a typically strong performance, shipping 69.42 million tonnes during the quarter, and leaving the division on track to achieve its iron ore guidance for fiscal 2019, with the miner retaining its forecast to ship between 273 million and 283 million tonnes of iron ore from Western Australia in the year.