CORRECTED-UPDATE 1-BHP Billiton says its iron ore expansion was too rapid
(Changes to "underlying cost" from "underlying growth" in first paragraph)
By David Stanway
BEIJING, June 5 (Reuters) - BHP Billiton expanded iron ore production too rapidly, causing the Anglo-Australian miner to overlook the underlying cost of its business, its chief executive said on Thursday.
However, Andrew Mackenzie said that despite the iron ore market facing temporary overcapacity, there was enough demand coming back from China and elsewhere to justify the firm's capacity increase.
"We don't quite see the case for the scale of investment we saw in last 10 years ... But the base business we built is going to be a strong bedrock for decades to come," Mackenzie told reporters in Beijing.
Global miners, including BHP, Anglo-Australian rival Rio Tinto and Brazil's Vale, have all banked on a sustained increase in iron ore demand from China, ramping up capacity and boosting available seaborne supplies.
But a slowdown in China's economic growth to its weakest in 23 years, which has coincided with a surge in new iron ore supplies, has sparked warnings of a global oversupply and long-term depressed prices.
BHP, the world's third-biggest producer of the steelmaking raw material behind Vale and Rio Tinto, is on track to raise its total annual production to 260-270 million tonnes, up from a planned 217 million tonnes in 2014.
While the glut has caused iron ore prices to drop nearly 30 percent this year to their lowest since September 2012, Mackenzie said BHP's low production costs would make it easier for the firm to weather any downturn. Continuación...