Shireen and joining me now it's a very interesting guest. She of course is the CFO of the world's largest miner. We're talking about Vandita Pant, the CFO at BHP. Vandita, thanks very much for joining us here in our studio in Davos on CNBC TV18. Appreciate your time.
Thanks a lot, it's great to be talking to you, Shireen.
So let me start by asking you about what the demand environment looks like at this point in time as far as the commodities that you look at, whether it's coal, iron ore, in light of the uncertainty that we continue to see on Chinese demand.
Yeah indeed. So if I were to step back, some of the commodities are really related to global growth, which has been pretty good. So if I were to pick up copper, demand has been robust, and in fact in the long term we think the drivers of copper demand get amplified from not just the traditional drivers of standard of living increase, higher urbanization, but now also due to energy systems which need to be rebuilt and on top of it, build-out of AI infrastructure, which is hugely metal-intensive. In terms of steel-making commodities demand, China has been an uneven story, but overall it has still had around a billion tons of steel for the sixth year in a row. And for metallurgical coal, which is steel-making coal, India with its production of 140 million tons of steel coming from 100 million tons a couple of years back means that metallurgical coal demand has been pretty solid. So over a long term, I do think that the commodities that the world needs to develop, to decarbonize, to digitize, have a very positive trajectory, in fact of a scale that we have never seen before.
So given the fact that you continue to see demand being robust while China continues to be patchy but we can't scoff at the numbers still as far as China is concerned, what's the pricing environment? What does the pricing trajectory look like at this point in time?
So iron ore would be a balanced kind of market, but over a period of time, we have been saying for a very long time that over a longer period of time, China steel does plateau, as has happened in almost every economy as it has transitioned through its development phases. And as it starts to plateau, for BHP which is the lowest cost producer of iron ore in the world for the fourth year in a row, it's a fantastic place to be. So it will remain a very, very interesting and hugely attractive market for us. Copper is a very different story. Till about 2050, based on the amplification because of decarbonization and AI, we think copper demand will grow by 70%. Wow, just over next 10 years, Shireen. We will need an investment of a quarter of a trillion dollars just for copper to keep pace with what the world needs. And it's a fantastic position for BHP because we are the largest or second largest producer of copper depending on the measure you choose, and the largest holder of endowment of copper in the world.
So you know you spoke about the investment number that is required. What do you foresee in the near term in terms of additional incremental investments that you will need to make? What are you looking at?
Yeah, so copper is very attractive to us. We really like it. As I mentioned, we have a huge portfolio already. We have growth options and projects in Australia, in Chile, in the US. And very recently, we have acquired, we have gone into a joint venture in Argentina, and that is a growth option where we will look to develop what is one of the most interesting and attractive copper discoveries of the last decade or so. So huge growth vector on copper within BHP. Along with that, we also are growing in potash, which is a fertilizer commodity, and that again has very attractive demand dynamics because of increasing population, rising growth of incomes means calorie values go up, and as the arable land gets very constrained, potash is really needed. So we're looking to grow in potash as well, both with real secular demand trajectory from here on.
Mhm. And what about M&A? I know Anglo was something that you were looking at, of course it didn't work out. But what's the update on that front? Another attempt likely?
Well as I said, Shireen, from our perspective, growth in copper is a really important strategic imperative for us, and that for us comes from organic growth. As I mentioned, largest producers of copper, but also in the last few years we are the highest absolute copper growth miner in the world. So that will always be our focus. From an M&A perspective, as I said, we have done a couple of small M&A deals and integrated them very well. In South Australia, we have an asset which we have integrated well, and now as I mentioned, Argentina, which is going to be another growth option for BHP.
Well you talked about India. Let's talk about how India is shaping up in terms of strategic interests as far as BHP is concerned. You gave us a very quick glimpse into what demand is shaping up like, but how do you see India in terms of its role and relevance for you strategically over the next 5 to 10 years?
Yeah, so India has been a fantastic long-term partner for BHP, and BHP has been a long-term partner for decades with India. Traditionally it has been steel-making coal, so we have got 40% of our coal goes to India, the metallurgical coal. And as India continues to look at increasing its steel-making capacity from 140 million tons today to doubling it potentially by 2030 and way beyond, we will continue to grow and service India for that requirement.
Another one is copper. As the country is yet to be built, if I can say it that way, that's the progress it is, but that is the exciting part, Shireen. Growth is only one-way trajectory. Infrastructure yet to be done. Copper is the pervasive commodity needed. And right now, we are already the largest suppliers of copper concentrate to India, and we see by our estimates that demand growing by 5 times by 2050. So we are also partnering with lots of our customers in India, steel-making partners for example, around low carbon emission technology. So either it is for the growth or for the decarbonization aspirations of India, I think BHP and India will continue to have a very symbiotic and a strategic relationship.
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