BHP Billiton Ltd. (BHP), the world’s biggest mining company, signaled it will expand in the shale oil and gas industry in the U.S., forecasting global commodity demand will jump 75 percent over the next 15 years.
“It’s my intention to make us hugely proficient, if not one of the leaders in the shale gas and oil business,” Andrew Mackenzie, chief executive officer of the Melbourne-based company, said today in an interview. “Which means if there are opportunities elsewhere we’ll be able to consider them with a lot of precision and interest.”
China, the biggest consumer of metals and energy, will continue to fuel demand for commodities as 250 million people move into cities, said Mackenzie, 56, who succeeded Marius Kloppers in May. BHP spent $20 billion in 2011 on shale assets in the U.S., joining rivals including Exxon Mobil Corp. and China Petrochemical Corp. in seeking to tap surging energy demand that’s driving an industrial revival.
BHP slipped 2.0 percent to A$34.90 at the close of trading in Sydney. It’s dropped 5.9 percent this year.
Premier Li Keqiang is driving reform of the Chinese economy in a bid to maintain growth while reining in financial risks and controlling local government debt. China’s policy makers have this year rolled out targeted measures to support the economy, including boosting infrastructure, tax cuts and help for small companies.
“I’m on the whole reasonably positive about China,” Mackenzie said. “They’re doing a good job at rebalancing and moving more towards a consumption-based economy and at the same time thinking more deeply how they can make more efficient use of the resources that we sell to them and others.”
Asian Demand
Asian energy demand, including from China, is helping drive the development of about $180 billion of liquefied natural gas projects in Australia, BHP’s home country. The nation is forecast to surpass Qatar as the world’s largest exporter of LNG by the end of the decade.
“We’re not yet investing in export terminals in the U.S., we’re simply producing the gas,” Mackenzie said. “But I do believe that Australian LNG will face stiff competition from U.S., Canada and Africa to supply the next tranche of LNG into Asia.”
The U.S. Energy Department is weighing 20 applications for LNG export terminals. Hydraulic fracturing of shale rock formations from Texas to West Virginia has boosted supplies of gas in the U.S., helping the nation overtake Russia as the world’s biggest producer of the fuel in 2009.
BHP, due to report earnings on Aug. 20, expects annual economic growth in China to moderate toward 6 percent over the next two years, Chief Financial Officer Graham Kerr said in April. China, whose economy grew 7.9 percent last year, the slowest since 2008, accounts for 30 percent of BHP’s sales.
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