BHP Billiton sees weak European, U.S. growth for years

By James Regan and Michael Smith

SYDNEY (Reuters) - BHP Billiton <BHP.AX><BLT.L>, the world's biggest miner, expects weak growth on both sides of the Atlantic to persist for many years as Europe and the United States deal with their debt crises, heightening the reliance on China's fast-growing economy.

Chairman Jac Nasser said BHP was confident that China, the company's biggest customer, would continue to see its economy grow at 7-9 percent a year.

"We will see only low growth levels for the U.S. and Europe for as far out as we can see," he said.

Benefiting from strong global demand for iron ore, copper, coal and other industrial raw materials, analysts are tipping BHP Billiton to report a near-doubling in net profit for fiscal 2011 to a record of around $22 billion when it reports on August 24.

While Anglo-Australian company expects growth to remain low in the United States and Europe for the foreseeable future, it has faith in the long-term resilience of both the United States and Australia, Nasser said.

"At BHP Billiton we are confident about the future of both countries. We believe both Australia and the U.S. offer continuing opportunities on a large scale," Nasser told a business lunch in Sydney.

While markets have been rocked by economic uncertainty in recent weeks, BHP Billiton has spent $17 billion this year taking over shale gas producers in the United States, and is spending $9 billion in Australia this year on expansion projects.

UBS equity strategist David Cassidy said he agreed with BHP's outlook for strong growth in China and low growth in the United States and Europe.

"It's just a matter of how low in the U.S. and Europe. There's structural issues there. Low growth is better than no growth," Cassidy said.

"If it's low growth we can probably see the equity market go up. If it's no growth, we will probably see the market go lower."

Nasser said while Australians fear they may be engulfed in the global turmoil, they should focus on remaining competitive.

"My own view is that Australians should feel quietly confident about our ability to manage through what is playing out in the northern hemisphere," said Nasser, who formerly ran Ford Motor Co <F.N>.

But he also joined other Australian executives who have been speaking out recently about Australia's lack of productivity growth over the past decade, highlighting labor shortages and infrastructure bottlenecks holding the country back.

"We are facing and will face increasing competition from countries like Brazil who have high quality, low cost ore being shipped into China. We cannot be complacent," he said.

He warned that Australia's proposed $23 a tonne carbon tax, due to be imposed from July 2012, would do more harm than good.

"In the immediate future the downside is high and the upside is low," he said of the tax. "If it was me, I would slow it down just a touch."

Still flush with cash, BHP is seen as a potential predator for more resource deals but Australian investors on Wednesday played down talk it may be lining up a joint bid for Lundin Mining <LUN.TO>, which sent shares in the Canadian miner up almost 20 percent. [ID:nL3E7JA0CA]

(Writing by Sonali Paul; Editing by Balazs Koranyi and Lincoln Feast)