BHP warns on Chinese iron ore demand BHP Billiton, the world's biggest mining company by market value, has warned of "flattening" iron ore demand from China, in the most bearish comment yet from any leading miner about the world's largest consumer of the commodity. Speaking at an industry conference in Perth, Australia, on Tuesday, Ian Ashby, president of BHP's iron ore division, said the company expected growth in Chinese demand for iron ore to slow to single-digits. The [Chinese] economy is shifting, it's changing. Steel growth rates will flatten and they have flattened," Mr Ashby said at the Global Iron Ore & Steel Forecast Conference. Seaborne iron ore demand will continue to grow strongly over the next 10 years, albeit at a low compound annual growth rate. In recent months, BHP has grown increasingly cautious about the outlook for commodity prices as Chinese demand slows. Mr Ashby's comments followed reports in the Australian press on Tuesday that Jacques Nassar, BHP chairman, had told investors the company was re-evaluating its spending plans and returns offered by key investments. Iron ore is the biggest commodity earner for miners such as BHP, Vale of Brazil, and Rio Tinto. China's construction sector accounts for more than a fifth of global steel demand and is a major driver for global iron ore prices. But construction activity has slowed during the past year as Beijing has tried to cool growth in the property sector, leading many analysts to believe that China's appetite for steel was set to cool. Iron ore prices fell sharply last year amid monetary tightening by Chinese authorities, which affected the ability of the country's traders to access finance. The price of iron ore on the spot market fell to $116.75 a tonne, according to pricing agency Platts. The spot price has held up steadily so far this year, staying above $140 per tonne most of the time, partly due to tight supplies and to seasonal inventory build-up at Chinese ports over the winter holidays. At the start of the week, the price was at $146.50 a tonne. Mr Ashby said he believed the "floor" price for iron ore was $120 a tonne and that Chinese steel demand would peak at 1bn-1.1bn tonnes by 2025, from 700m tonnes in 2010. BHP's caution is in marked contrast to rival Rio Tinto, which offered a more bullish assessment of iron ore demand at the same industry conference. "By 2020 China's crude steel consumption is forecast to be about 1bn tonnes, just under half of forecast world consumption and almost eight times the volume of the world's second-largest forecast consumer, India," said David Joyce, head of expansion projects at Rio Tinto iron ore. "We forecast that crude steel production will peak in China at about 750kg per capita out towards 2030," Mr Joyce said. In spite of the cautious outlook on Chinese demand, BHP said it was pushing ahead with an ambitious expansion of its operations in western Australia. The company said there was no plan to delay a $20bn project in the Pilbara and wants to lift iron ore production from 165m tonnes a year to 350m tonnes a year by 2020, and ultimately to 450m tonnes. BHP had been expected to approve three $10bn-plus growth projects this year alone: the construction of an outer harbour at Port Hedland in western Australia, the expansion of its Olympic Dam mine in south Australia, and the Jansen potash project in Saskatchewan, Canada. However, speculation is mounting that at least one of those investments will be delayed. Analysts estimate that BHP will have to spend at least $10bn on a new jetty and wharf at Port Hedland to increase iron ore production beyond the 240m tonnes a year the company believes it can export from the increasingly congested inner harbour. BHP will then have to spend a further $10bn to expand its Jinidi, South Flank and Marillana mines. Mr Ashby said outer harbour expansion could be done in stages to meet demand. Additional reporting by Leslie Hook in Beijing