BHP Billiton: Developing Countries Will Drive Demand

Global downturn is cutting into China's appetite for resources, but developing countries' hunger for raw materials remains positive, the world's largest mining company said.

MELBOURNE, Australia (AP) -- The global economic downturn is cutting into China's rampant appetite for resources, but developing countries' hunger for raw materials remains positive in the long term, the world's largest mining company said Wednesday.

"Macroeconomic indicators show that Chinese growth has softened during the quarter, albeit from very high levels," BHP Billiton Ltd. said in its production report for the three months through September. "We expect volatility and uncertainty to continue in the short term."

However, "we remain confident that the ongoing industrialization and urbanization of China and other developing economies will continue to drive longer-term demand for our products," it said.

China's National Statistics Bureau on Monday confirmed suspicions that the Asian giant was not invulnerable to the downturn when it reported the economy had expanded by 9 percent in the third quarter of 2008, down from 10.9 percent a year earlier and its slowest pace in five years.

A weaker China spells trouble for other Asian countries that have thrived on robust sales of raw materials and other manufacturing inputs to their giant neighbor.

Gavin Wendt of stock market research firm Fat Prophets agreed with BHP Billiton's assessment that China was experiencing a slowdown, and added that it was being exacerbated by a "post-Olympics slump."

"There is an easing off in economic growth but China is not going to fall off the edge of the earth," Wendt said.

BHP Billiton said iron ore output in the third quarter rose 15 percent to 32.87 million U.S. tons (29.82 million metric tons) on the previous corresponding quarter as the company expanded projects in Western Australia state.

Crude oil, condensate and natural gas liquids production rose 31 percent to 18.9 million barrels while total petroleum products rose 15 percent 34.8 millions barrels of oil equivalent due to new projects.

Aluminum output declined 8 percent during the latest quarter to 340,614 U.S. tons (309,000 metric tons); uranium production climbed 19 percent to 1,224 U.S. tons (1,110 metric tons); and manganese ore output was 27 percent higher at 2,017 U.S. tons (1,830 metric tons).

The company spent $166 million on mineral exploration during the latest quarter and $148 million on oil exploration.

BHP Billiton stocks fell more than 7 percent to close at A$27.25.

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