Iron ore prices likely to rise: BHP's Kloppers

SYDNEY: Iron ore prices were on track to rise this year despite global economic concerns, the head of the world's biggest miner BHP Billiton said Sunday as he backed China's growth to support commodity prices.

BHP chief executive Marius Kloppers said while the world had not yet fully overcome the global slump, those economies recovering the quickest had the strongest demand for raw materials.

"For iron ore, coking coal, the prices that we get today were settled at the depth of the economic crisis so I think there is probably a good chance that they will go up from where they are today," he said.

Kloppers said the mining giant was cautious about the global economy -- despite last week announcing its half-year profit had more than doubled to 6.14 billion US dollars -- but "relatively optimistic" about commodity prices.

"And the reason for that is that we think that the world economy has got a few issues to deal with," he told the Australian Broadcasting Corporation's Inside Business programme.

"But the bits of the world economy that are doing well, are all of those bits that consume raw materials."

Kloppers would not speculate about the final iron ore price to be settled under annual benchmark contracts with Asian steelmakers but noted that the spot market provided a key indicator.

"One must remember what the benchmark price is; once a year people sit down and they try and discover the forward price for the next 12 months which is set by the supply and demand that they anticipate for the next 12 months," he said.

"So as they sit down this time... they are in luck, they have this market, the traded market, on which over 70 percent of the iron ore in China is already traded and where there is a ... price visible, and that price is roughly 100 percent above where today's price is."

"I don't know that the price settlement will be when we get to that point, what I do know is that today's price is almost double of what last year's benchmark price, which was set in the depth in the financial crisis, was."