BHP (BHP) CEO Andrew MacKenzie

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BHP (BHP) CEO Andrew MacKenzie says it will be another 10 years before the iron ore market comes into balance 

“There are some commodities, like oil and copper, where there is a natural decline because pressure drops off, grade drops off.  One of the markets that will take longest to come back into balance is the iron ore market.  The reality is we’ve settled down now to a price that we would say is more realistic on the basis of fundamentals of supply and demand.  We’ve had such a long boom. To walk that through, in my view, may take another 10 years.”

So you’ve got to keep your cost structure lean 

“Consolidation, particularly of the high-cost producers, it will carry on much longer than you think they humanly should.  In the meantime, you’ve got to be at the bottom of the cost curve, you’ve got to be doing everything I’ve said, running things in the most productive way possible, or your hedge funds won’t want to invest in us.”



Source: Bloomberg Interview