TOKYO -- The Chinese economy is "doing quite well" despite the trade war with the U.S., the head of Australia's BHP Billiton, the world's largest miner, told Nikkei in a recent interview.
The trade conflict has raised concerns over a global slowdown, but CEO Andrew Mackenzie said the battle between the top two economies has not hurt BHP's businesses.
"The vast majority of the materials that we produce are sold into Asia and then converted into goods, which are then resold elsewhere in Asia," he said while on a visit to Tokyo. "We are not really affected directly by the drop in trade between China and the United States."
The Chinese economy is "doing quite well at the moment" and the steel sector, BHP's principal product, is doing especially well partly due to Beijing's focus on improving infrastructure, Mackenzie said.
China is trying to offset the negative impact of the trade war with a building drive. Beijing this month relaxed restrictions on infrastructure project financing so that local governments can use proceeds from special bonds for construction.
"We now see a record of steel production in China," said Mackenzie, emphasizing that BHP's iron ore and metallurgical coal businesses are doing well.
The price of coking coal on the Dalian Commodity Exchange has hit $118 a ton, up 66% from the beginning of the year, while iron ore is up 66% to $131 a ton. The rise in the value of iron ore was sparked by a supply disruption earlier this year, when a dam operated by Brazil's Vale collapsed, but Mackenzie also attributed the trend to strong demand for Chinese steel domestically.
Asia accounts for the majority of global coal, iron ore and steel demand. The market is "dominated by what goes on in Asia and China," he added.
The company produces a wide range of resources including oil, metals, coal and ores. Last year, however, BHP sold its U.S. shale oil and gas operation to BP for $10.5 billion.
"We felt it was not as good a business as other businesses that we had within BHP," said Mackenzie, explaining that the life span of shale is relatively short, which makes it expensive to produce.
Instead, the company aims to increase its production of copper and nickel, hoping to meet a demand increase for electric cables and batteries for electric cars.
Mackenzie said it would take time for EVs to become more widely used, but the company wants to position itself to capture the boom. He added, "In that sort of market, we would anticipate much better margins in copper, and that's why we are investing in copper."
"We look 20-50 years ahead, but [want] to have more copper production ready in 10 years' time, so that we can benefit from some of those features."
The mining industry is under pressure from investors concerned about climate change and calling for more sustainable development. Mackenzie said that BHP would continue its offshore conventional oil business, but it is now "unlikely to invest as much in fossil fuels for power generation than in some of the other commodities in decades to come."
On Wednesday, BHP signed an agreement with Mitsubishi Development, a subsidiary of Japanese trading house Mitsubishi Corp., to cut emissions in a range of industries, including steel.
The move came after BHP's recent $6 million investment this year in Canada's Carbon Engineering, which has developed technologies to extract carbon dioxide from the atmosphere to combat global warming.