BHP Billiton faces lost iron ore sales

Source: Reuters

Date :16/11/2008 16:46:49

Mining giant BHP Billiton is facing lost sales of up to $600 million (403 million pounds) in its iron ore business in the second half of 2008, a newspaper reported on Saturday.

The group's Chief Commercial Officer Alberto Calderon told The Australian that credit issues had led some steel mills in China to ask for shipments to be deferred, reducing the company's iron ore sales by six million tonnes by the end of the year.

The Anglo-Australian miner's chief rivals, Brazilian based Vale and fellow Anglo-Australian miner Rio Tinto Ltd/Plc <RIO.L, have both already announced they were seeing reduced iron ore sales as demand from China plummets amid the global economic downturn.

But Calderon told the newspaper that BHP Billiton would not be reducing production, and the only reason the shipments were unlikely to be sold this year was that it would take time to sell them on the spot market.

"I am adamant you don't cut production -- there's no reason for a low-cost producer to cut, and this has nothing to do with the EU," he told the newspaper from London on Friday. The 15-nation eurozone on Friday officially fell into recession.

"We are hearing from customers, big customers, in China with very, very high stocks, and we are hearing some customers are having difficulty opening letters of credit.

"I had a meeting with my marketing team during the last two days and our estimate is that for this calendar year we may have deferrals for up to five per cent of our full-year budget."

The company's full-year budget was for sales of 130 million tonnes, worth $600 million at benchmark prices, the paper said.

SYDNEY (Reuters)