For some time now, market watchers have noticed BHP Billiton's growing interest in copper, but on Thursday, the company specifically talked about how it expects to favor the red metal much more than iron in the near future.
For some time now, market watchers have noticed BHP Billiton's (NYSE:BHP,ASX:BHP,LSE:BLT) growing interest in copper, but on Thursday, the company specifically talked about how it expects to favor the red metal much more than iron in the near future. According to Bloomberg, BHP CEO Andrew Mackenzie told reporters in China, "[a]s we go forward, we're likely to invest a lot more in copper than we are in iron ore." Driving that decision is the company's forecast for increasing copper demand from China. Meanwhile, iron prices continue to languish near five-year lows. The miner announced earlier this year that it will focus on the "four pillars" of iron ore, copper, coal and petroleum as it spins off some of its other assets in a proposed demerger (the new company will be named South32). China's growing middle class? Further explaining the move to Chinese reporters, Mackenzie said, "[w]e expect growth in demand for copper in China to be faster than growth in demand for steel and then for iron ore as China moves more into a consumption phase and uses a lot more electricity ... [a]s your patterns of demand growth change, we will change our patterns of investment to supply and meet that demand." To be sure, even though firms such as Goldman Sachs (NYSE:GS) are calling for an end to the commodities supercycle on the back of a slowdown in China — with some analysts even saying there could be a drop in commodities demand as China shifts from an investor-driven to a consumer-driven economy — BHP is still positive on copper. Indeed, BHP's marketing president, Mike Henry, told The Wall Street Journal last month that the company is forecasting a significant copper deficit by 2018. "Copper demand is going to continue to grow for a really long time," he stated.