15th Oct 2015 06:00
LONDON (Alliance News) - BHP Billiton PLC has said it has no plans to cut production and denied that a series of recent mine closures will spur higher commodity prices, days after peer Glencore PLC slashed its zinc production by a third, the Financial Times reported Wednesday.
Arnoud Balhuizen, head of marketing at BHP, said that the Anglo-Australian mining group would not reduce output because its operations were generating cash, even as some rivals struggle with commodity prices close to six-year lows.
"The difference between us and some of our competitors is that we have big, tier-one, high-margin businesses. Obviously we are not going to shut very cash-rich operations," said Balhuizen.
His comments come just days after rival commodities group Glencore said that it would cut its zinc output by a third because current prices did not "correctly value" its resources. Glencore's unexpected decision sparked a broad-based rally in metal prices and mining shares.
Balhuizen said closing or cutting production from unprofitable mines would not lead to higher prices, which would be set by the marginal producer.
The newspaper reported on Monday that Rio Tinto PLC also has said it won't cut copper production. The FTSE 100 miner said it would not be logical to hold back output and leave space in the market for rivals with higher costs, the report said.
By Joshua Warner; [email protected]; @JoshAlliance
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