From the AFR, BHP is really ratcheting up the gloom:
Alberto Calderon, BHP’s chief executive of aluminium, nickel and corporate development, said it was seeing a change in China which Australia needed to be prepared for.
“We are already beginning to see the beginning of the end of the first stage of economic development in China,” said Mr Calderon. “The pace of demand of iron ore, from China, has slowed down by more than half, and the mining industry is expanding supply at a very considerable pace.”
…“Imagine what would happen to this country if 25 per cent of its exports suddenly disappeared?”
…“The current account balance is highly likely to be unsustainable – more than an eight per cent deficit – which means the exchange rate would come under significant pressure and could revert to the levels of the 1990s. The fiscal deficit would almost certainly grow significantly and probably unsustainably.”
Despite this negativity, BHP stuck to its 1.1 billion tonnes per annum by 2025 forecast for Chinese steel. This figure assumes aggressive growth yet BHP is still feeling very gloomy indeed.
Calderon concluded that BHP was preparing for a difficult period and suggested that Australia do the same.
Fat chance. Compare this with the sunny, happy guff still pouring out of our officials. First the RBA this morning, from The Oz:
“Strong growth in Asia will continue to provide significant benefits for the Australian economy,” Chris Kent, assistant governor responsible for the Reserve Bank of Australia’s economics department said at a conference in Canberra.
Mr Kent said rising export volumes will help offset a likely peak in both the price of industrial commodities, and in mining investment – which he tipped will reach its high over the next year.
“The third phase of increased production and export of resources has also commenced but has much further to run, especially in the case of liquefied natural gas, for which investment takes place over a number of years before production comes on stream,” Mr Kent said.
Or Ken Henry still resisting the idea that the dollar needs a nudge downwards to cushion the blow.
I know that both parties have their interests: miners to beat up the costs issue and officials to keep confidence spinning. And there are hints in both quotes that show that the gap is not as large as it appears. The RBA now sees an investment peak in the next year, more gloomy than we’ve heard before, and on the part of BHP not cutting its China steel output projections.
Nonetheless, the juxtaposition is stark and in one would have thought far healthier the other way around.
