By Sarfaraz A. Khan and Gohar Yousuf
The world’s largest mining company BHP Billiton (BHP) is quite optimistic about its future. The business anticipates
a 75% increase in commodity demand in the next 15 years driven by
China’s economic growth. The company gets nearly 30% of its revenue from
China.
However, the country's impact on BHP Billiton's earnings
is even bigger than that. The company’s future is closely tied with
China, which is the biggest consumer of iron ore. Despite
the current slowdown, China’s economy has expanded by more than 5 times
in the last 10 years. Currently, it is eyeing a 7.5% growth
in its gross domestic product for 2013, which could slow down to 7.4%
in 2014. However, anything above, or even close to 7%, is considerably
more than the expected growth rate of some of the other leading
economies. Moreover, by 2028, around 250 million people in China will
move to the cities from rural areas, which will fuel the demand of
commodities in general, and iron-ore in particular. BHP Billiton wants
to capitalize on this growth and is aiming to expand its annual
production by 8% for the next two years.
