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[CANBERRA] BHP Billiton , the world's biggest mining company, warned on Wednesday that a global oversupply of commodities that is putting pressure on prices is likely to be be prolonged.
In metals markets, newly installed low-cost supply can now be stretched to meet growing demand, BHP Billiton Chief Executive Andrew Mackenzie told a gathering of sector executives and Australian lawmakers. "Incremental supply, induced during periods of higher prices, will take longer to absorb and this means over-supply may persist for some time," he said.
BHP and rival global miner Rio Tinto have been criticised in Australia for a massive expansion of their iron ore mines despite a collapse in the price of the steel-making ingredient.
Prices for most commodities are now lower than the extreme highs of the recent past and closer to more sustainable longer term levels, Mackenzie said.
BHP is also battling multi-year low prices for coal, copper, nickel and other minerals it mines.
Smaller iron ore miner Fortescue Metals Group Chairman Andrew "Twiggy" Forrest last month launched a failed bid for a government inquiry into alleged overproduction by BHP and Rio Tinto, saying it was jeopardizing the economy.
The plea by the founder of the world's fourth-biggest iron ore miner was condemned by industry lobby group Minerals Council of Australia, for threatening to set the country on an"interventionist path".
BHP's iron ore division president Jimmy Wilson said on Wednesday that BHP's share of the seaborne iron market has reamined steady at about 17 per cent despite its major investments. "Fortescue Metals has grown its share of seaborne exports to 11 per cent since entering the market in 2007 - they have been the world's most prolific iron ore growth story between 2007 and the end of 2014," he wrote in a comment piece for The Australian newspaper.
The price of the country's highest source of foreign income dropped as low as US$46.70 in April, less than half the price a year ago, but has rebounded slightly since.