For as long as the world's nations, specially China, continue to build cities and other infrastructure-related essentials, demand for iron ore will continue to grow in this decade, albeit slowly.
The state government of West Australia has rejected requests by Fortescue Metals Group to delay the payment of some more than A$200 million in royalties as the iron ore miner pursues its ambitious expansion plans.
Marius Kloppers, BHP Billiton's chief executive, told the Brisbane Mining Club on Wednesday he sees the global iron ore market growing slowly to 650 million tonnes this decade compared with the last decade's recorded 800 million tonnes in the last decade, spurred by a decelerating China appetite.
Mr Kloppers explained China's demand for the steelmaking ingredient would just shift to other concerns, as the country moves from an investment-led economy to a consumption-led economy.
"As these cities and buildings are completed and as people continue moving to the cities, their future needs will include the next level of consumer goods being kitchen appliances, heating and air-conditioning, cars, and so on," he told the Brisbane Mining Club.
In the last decade, China's surge to become one of the world's economic leaders saw a massive overdrive in the country's formation of new cities, buildings, roads, housing and other infrastructure, all to provide for and support its colossal urbanisation trend.
But the global miner projects the world's second-largest economy will grow to a low 7 per cent to 8 per cent this year, and will stay at this level for the next decade.
"While all this occurs, steel intensity per unit of GDP will continue to moderate, and growth rates for iron ore and coal are likely to decrease," he said.
Still, it remains a positive growth number for the world's largest consumer of iron ore.
"While this is a lower level than China's annual growth of around 10 per cent over the past decade, clearly a significant opportunity remains," Mr Kloppers said.
"The progressive transition into a consumption-based economy implies increased demand for commodities other than steel, such as copper, energy, aluminum, and so on," he said. "As the middle class continues to grow, better diets will also imply a higher demand for commodities such as potash."
To contact the editor, e-mail:
Most Popular Slideshows
- Australia Bids Adieu to Adam Spencer's Mornings on ABC's "702 Breakfast" Show [PHOTOS]
- Top 10 Hottest Celebrities with Shocking Weight Loss (And Find Out Their Secrets!) [PHOTOS]
- Mars Curiosity Rover Photos: UFO Hunter Spots Strange 'Ruins,' 'Missile' [PHOTOS, VIDEO]
- Miranda Kerr Exposes Breasts to Crew, Wardrobe Malfunction 'Deliberate Accident?' [PHOTOS]