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The head of Australian miner BHP has said he sees long-awaited “green shoots” in China’s depressed property market after Beijing unveiled a stimulus package to try to boost the economy.
The world’s largest mining group relies on China’s construction industry to fuel demand for its iron ore and copper, and Mike Henry, chief executive, said there were signs of recovery.
“We’re finally starting to see some green shoots,” he said in a Financial Times interview in Tokyo. “If you look at the parts of the economy that are lagging, it has been consumption and property. Surprise, surprise, it comes back to consumer confidence.”
Henry said policymakers needed to structure stimulus in a way that built consumer confidence, while cautioning: “I don’t know that it’s ever going to be just a matter of money.”
China launched a stimulus package in September, including interest rate cuts and funding for the stock market. Following the measures, sales for the 100 biggest property developers rose year on year in October for the first time in 2024.
Lawmakers have spent three years grappling with a seismic property showdown and are meeting in Beijing this week after previously signalling more support for local governments that rely heavily on land sales.
BHP is the world’s third-largest producer of iron ore, a key steelmaking ingredient, and a top miner of copper, widely used for electrical wiring when buildings are finished. The health of China’s property sector has thus been a big factor in driving commodities prices and profit levels.
Henry suggested that iron ore prices might not be buoyed much beyond their current level of just above $100 a tonne as China’s excess steel production would be channelled towards domestic real estate. He said that would help ease surging Chinese steel exports, on course to be the highest since 2016.
The BHP chief also addressed speculation about deal activity.
In May, it dropped a £39bn takeover pursuit of UK mining rival Anglo American, yet under UK rules it can come back with an offer at the end of this month, when a six-month embargo expires.
A recent visit by Henry and Catherine Raw, BHP’s head of mergers and acquisitions, to South Africa, where BHP no longer has operations but Anglo has platinum and iron ore mines, has fuelled speculation that the mining industry heavyweight could soon table another offer.
Henry said the visit had “nothing to do with the acquisition opportunity”, claiming instead it was for general relationship-building with new ministers in Pretoria, as well as for visiting investors and people related to a BHP-backed nickel project in Tanzania.
BHP landed itself in a pickle last week over comments by chair Ken MacKenzie, who said at the company’s annual meeting it had “moved on” from the failed Anglo takeover attempt.
The company later backpedalled, issuing a statement saying Mackenzie’s comments were not intended as formal market guidance that no further offer would be made.
Additional reporting by Thomas Hale in Shanghai
https://www.ft.com/content/3411dd6c-9f95-4256-a110-d24e19ede4af
