BHP Billiton Ltd., the world's biggest mining company, said growth in sales to India is outpacing gains in China as the southern Asian nation requires more coal and nickel to meet rising demand.BHP is raking in higher sales from India than it did six years ago from China, which now accounts for a fifth of revenue, incoming Chief Executive Officer Marius Kloppers said at a conference with reporters in Melbourne. BHP is still looking to invest in bauxite and iron ore projects in India, he said.
India's government plans to spend as much as $450 billion by 2012 to build new roads, ports and power stations and accelerate growth to 10 percent from an average 8.6 percent in the past four years. BHP said Aug. 22 it has as much as $50 billion of projects it could develop to feed rising demand.
``Everybody in the industry missed the Chinese growth story, and what BHP is doing now is to set themselves up for the next stage when India could go on the same growth path,'' said Mark Pervan, a commodity strategist at Australia & New Zealand Banking Group Ltd., in Melbourne. ``They've built the business for Chinese demand, and what they want to do with the $50 billion of projects is to prepare for the new emerging economies like India...''
[BHP] gained 6.5 percent yesterday after posting its eighth consecutive record half-yearly profit on Aug. 22.
BHP's sales to China jumped 47 percent in the six months ended June to $5.29 billion from a year ago, according to a slides presentation on Aug. 22. Its sales to India surged 56 percent in the same period from a year ago to $1.14 billion, according to calculations by Bloomberg from figures provided by BHP today.
China accounted for 20.4 percent of BHP's sales in the second half, whereas India only contributed to 4.4 percent of sales, BHP spokeswoman Samantha Evans said in an e-mail.
BHP's total sales have jumped to $47.5 billion this year, from $17.8 billion in 2002, and the $19.1 billion it had in 2001 when it was created from the merger of BHP Ltd. and Billiton Plc.
China, the world's largest consumer of metals and the fastest growing major economy, will continue to want more metals and iron ore, Kloppers said. India, the world's second-fastest growing major economy, will need energy commodities such as coal, as well as metals, he said.
``This is a larger portion of the globe industrializing than before,'' said Kloppers. ``It's not one economy, but two economies. We're pushing into India extremely aggressively in selling products there.''
The company pulled out of a partnership with South Korea's Posco, Asia's third-largest steelmaker, to invest in a $12 billion steel and iron ore venture in the Indian state of Orissa in 2005. BHP was to develop the iron ore mine for Posco's planned plant.
BHP is ``very glad'' it dropped out as the Indian government's refusal to allocate resources to the project has hampered development, said Chief Executive Officer Charles `Chip' Goodyear, at the same conference.
``The amount of resources they will allocate doesn't allow for the efficient operation of that mine,'' said Goodyear. ``We determined it won't be profitable for us to create a resource that's not competitive in a global market. Posco since has been trying very hard to get access to land and resources.''
BHP will announce details of its plan to increase iron ore production in Western Australia state to 300 million tons a year in the next two months, said Kloppers. The company is targeting production of 155 million tons from its mines from 2010.
``We've put in a date of 2015,'' for the new production, said Kloppers.
Indian Beats Chinese RM Demand?
When the world's largest mining company, Australia's BHP Billiton, says that growth in demand for its wares is coming more from India than from China, I pay attention. According to my copy of the Fortune Global 500, this firm is the largest in the land down under and the 205th largest in the world by revenues. India is requiring more shovelfuls' worth of coal to power its industries and nickel to build up its infrastructure. From Bloomberg:
