BHP EXPECTS DEMAND FOR COMMODITIES TO REBOUND MID 2010

LONDON, Oct 29, 2009 (AsiaPulse via COMTEX) -- BHP | Quote | Chart | News | PowerRating -- Resources giant BHP Billiton Ltd (ASX:BHP) expects underlying demand for its commodities to rebound in the middle of 2010.

Outgoing chairman Don Argus and chief executive Marius Kloppers delivered the forecast to shareholders at BHP's annual general meeting in London on Thursday and said the company remained cashed up and on the lookout for acquisitions.

Mr Argus also launched a strong defence of a 51.4 per cent leap in Mr Klopper's total remuneration for 2008/09 despite BHP's net profit having fallen 61.8 per cent.

Both men expressed their deep regret at the death of seven BHP workers during the year, and reassured shareholders that safety procedures had been tightened up.

On the outlook for commodities prices, Mr Kloppers said that while there had been a rebound in the past six months most of the demand was due to China building up its stockpiles.

He said that while BHP believed that most of China's stockpiling was now complete the key driver of commodities demand in the near term would depend on the approach taken by OECD countries.

"The key driver of incremental commodities demand in the near term will be to what extent the OECD experiences a more usual post recession restocking, or whether the restocking will be more lethargic this time around," he said.

"It is our view that we will come out of this recession less strongly than in previous cycles.

"We therefore believe it won't be until mid 2010 before we see clean underlying demand that is not masked by inventory effects."

Mr Kloppers said BHP intends to invest about $US10 billion ($A11.13 billion) in capital and exploration expenditure in the 2010 financial year.

Mr Argus, chairing his last AGM before his retirement in early 2010, said while the global economic recovery would be "sluggish" BHP believed there would be strong long-term demand for its products from across Asia.

BHP was also "strongly positioned" to invest in growth and "opportunistic mergers and acquisitions", he said.

The chairman also launched a lengthy defence of Mr Kloppers' pay packet for 2008/099, telling shareholders there had been some "misinformed reporting" about his remuneration package.

The company's annual report, released in September, showed Mr Kloppers received total remuneration of $US10.4 million ($A11.57 million) in the year to June 30, up from $US6.87 million ($A7.64 million) the previous year.

Mr Argus said while Mr Kloppers' base pay had risen to $US2.0 million ($A2.23 million) from $US1.68 million ($A1.87 million), most of his remuneration package was made up of incentive payments which were "at risk" and dependent on BHP's financial performance.

"I want to assure you that despite what has been reported Marius did not receive a 51 per cent increase in his pay," he said.

"Year on year his actual total remuneration was constant and his short-term incentive decreased.

"His base salary was also frozen for this current financial year, that is 2009/2010, as were all directors' fees."

Mr Argus also addressed shareholders' concerns about carbon emissions, telling them BHP shared the view of many scientists about the high risks linked to climate change.

He said while there was no silver bullet to address the issue, the challenge for the energy industry was to cut emissions while maintaining growth.

He called for countries to work together to reduce carbon, saying lifestyle and behavioural changes would be needed along with the deployment of low-carbon energy sources such as nuclear power, gas, renewables and coal with carbon capture and storage.

Meanwhile, Mr Kloppers reassured shareholders about reviews of BHP's management procedures and safety systems after seven workers died during "tragic" accidents in 2008/09.

"We will not relent until we have eliminated these sorts of incidents from our operations," he said.

(AAP) bl

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