Commodities | May 15 2006
By Rudi Filapek-Vandyck
BHP Billiton (BHP) CEO Chip Goodyear gave a presentation at the Global Metals & Mining Conference organised by Merrill Lynch last week. As one would have expected, the event turned out one grand bullish outlook for the resources industry and BHP Billiton in particular.
Two things stood out from the presentation, we believe – readers should take note we are relying on reports by Merrill Lynch analysts as we were not present ourselves.
When asked about his views on India, Goodyear reportedly expressed the view that India will be the next source of growth after China, rather running parallel to China. Also, Goodyear believes the class system in India is likely to cause lags compared to the force of the "egalitarian Chinese".
On simple maths of population and metal intensity in Western economies, the populations of China, India, Brazil and Russia (the so-called BRIC generation of countries) provides us with a consumption target in 25 years time of five times the world’s current consumption on metals.
As one would expect, Goodyear acknowledged this is simply unlikely to occur due to factors such as environmental, logistical and geological limits. But these mathematical extrapolations do provide strong support to the thesis of a longer lasting bull cycle for commodities.