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BHP Billiton bullish on commodities
Allan Seccombe
Posted: Tue, 04 Jul 2006

[miningmx.com] -- BHP Billiton has a positive view of the global commodities market and sees Africa as a critical part of its growth strategy, Vincent Maphai, chairman of the group’s South African division, said on Tuesday.

“Our forecasts for the industry are very positive. This means higher returns, which is why we are in this business,” Maphai said at the African Junior Mining Congress in Johannesburg.

“Peaks and troughs will come, but longer term we have no reason to panic about the industry,” he said, adding the outlook for commodities is one of continued strength.
we have no reason to panic
BHP Billiton is the world’s largest producer in the resources sector, straddling base metals, petroleum, aluminium, energy coal and diamonds.

BHP Billiton is focussing heavily on energy. It has a gas exploration project off the Namibian coast and it is awaiting the agreement of fiscal terms with South Africa’s Department of Minerals and Energy (DME) and Treasury to begin exploring for gas off South Africa’s West Coast, Maphai said.

“Energy is such a big issue on the African continent that anything that produces energy will always be good business,” he said.

BHP Billiton regards Africa as under-explored yet it holds an estimated 30% of the world’s mineral resources. BHP spends half of its exploration budget on the continent from below 20% just three years ago, he said.

“Our view is that if we still want to be in business down the line, we cannot ignore Africa. The challenges are enormous,” he said, comparing the continent with China before the current economic boom there.
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“If Africa can harness its huge hydropower potential this continent will change overnight,” he said.

BHP Billiton acknowledges there are difficulties in working in Africa, but the situation has improved remarkably since the end of the Cold War, with the number of civil wars dropping by about three quarters and an increasing move towards democracy.

Africa has a lack of infrastructure and is plagued by corruption.

"Those are the kind of issues you have to deal with. I call them challenges. They are not reasons for not going into the continent. There are huge problems and challenges, which are not about to disappear in the next 20 years, but there are pockets of improvement," Maphai said.

"If you are an Afro-pessimist you are going to miss out."

The key to African governments winning the confidence of investors is to abide by agreements that have been reached, Maphai said.