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Glory days are over: BHP

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Glory days are over: BHP

BHP Billiton has put a freeze on executive salaries and warned that recent highs in some parts of the mining sector are unlikely to be repeated.

In the company's annual report BHP chairman Jac Nasser marked economic instability in Europe and the US and softening growth in China as key pressure points for the industry.

BHP CEO Marius Kloppers also said lower commodity prices and higher costs and currency rates were also causing headaches for the company.

Outlining future supply and demand BHP said iron ore production was expected to meet the demand and "the scarcity pricing seen in recent years is unlikely to be repeated".

But the company said demand for raw materials was positive in the long term as the developing world industrialised, and copper was tipped to be a key growth point.

BHP said copper production was unlikely to meet demand through to 2015 and beyond, and prices were expected to be high enough to support the development of new mines in the future.

In line with the rising costs of all major miners BHP said its operating costs had increased 11.8 per cent per annum over the last three years.

It also said the skills shortage was still hurting the bottom line, with labour and contractor increases accounting for over a third of its costs.

In marking other problems BHP said government policies, including taxes, royalties, and industrial relations, had been key drivers for putting downward pressure on profit.

Singling out the Gillard Government's Fair Work Act, BHP said industrial action on its BMA coal mines in Queensland had hurt profits and while a solution was on the horizon more trouble was expected.

A sign of the tougher times now settling on the mining industry Kloppers declined an annual bonus and his total payout fell from $10.5 million last year to around $6.3 million this year.

The company's net profit also fell 35 per cent from $22 billion last year to $14.74 billion for the year to June 30.


 

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