PERTH (miningweekly.com) – Mining giant BHP Billiton CEO Andrew Mackenzie on Wednesday said that Australia’s share of the global commodities market would grow in the long term, if the country could remain competitive.

Speaking at Minerals Week, in Canberra, Mackenzie noted that while prices for most commodities were currently lower than the extreme highs of the recent past, they were closer to more sustainable long-term levels.

“Over the years, we have seen commodity prices rise and fall as demand increases and supply responds. This was true of almost all commodities over the last decade. The speed at which prices have returned to long-run levels for each commodity has varied as a function of the time taken for low-cost supply to come to market.

“What we’ve seen in iron-ore in the last year is no different from what we’ve seen across many commodities in recent years. Supply growth is the function of many countries and companies competing to meet global demand. So, we have to remain competitive,” Mackenzie said.

He added that it would be unproductive for Australia to cut or stall low-cost and profitable supply when the cycle dropped, saying that it destroyed value, penalised shareholders, customers and employees and disrupted the power of open markets.

“It is these markets that induce investment, during times of higher prices, and reduce investment during times of lower prices, which is exactly what we have done in our Western Australia iron-ore business,” Mackenzie said.

He noted that the commodity price changes not only affected iron-ore, but also other mineral and agricultural commodities and, as such, were having a major impact on companies and on Australia’s economic position.

“The reductions in prices we face today are something our industry and country has seen many times before and while this operating environment tests us, I am optimistic for the future.”

Mackenzie urged the Australian resources sector to extend its reach beyond simply recovering commodities, but said that the sector should be making a fundamental contribution to the fabric of Australia.

“We have many competitive advantages – our superior resource endowment, geographic location close to key customers, infrastructure linking these resources to markets, a skilled workforce and our stable political environment.

“These advantages set the Australian resources industry apart,” Mackenzie said.

“The mining sector must lead the way with innovation and sustainability to maximise the economic and social benefits of our operations and minimise our environmental footprint.”

Mackenzie noted that it was vital to the Australian resource sector’s future that the industry took a proactive role in the development of long-term policies and regulatory frameworks that affected it.

“Our industry is strong and vital to this country and to all Australians, from those who work in our mines and operations across the country, those who supply essential services to the industry, the many engineers, scientists and innovators to the millions of Australians who invest in us.”

He added that the economic benefits from mining and petroleum had increased Australia’s standard of living and helped the country to emerge as one of the world’s strongest economies and wealthiest nations.

“In the last 50 years, Australia’s terms of trade increased more significantly than almost any other comparable country. National income and government revenue grew and the wealth of Australians rose. Mining and petroleum companies have contributed at both state and federal levels through the taxes and royalties we pay,” Mackenzie said.

He pointed out that last year alone, BHP paid nearly $9-billion in taxes and royalties in Australia, with the sector as a whole contributing taxes and royalties of close to $23-billion.

“Beyond this, we have also been a significant contributor to the Australian economy through the investment in facilities and infrastructure, the purchase of local goods and services, and the jobs created in our business and throughout the supply chain.”

Mackenzie noted that by 2012, the mining and resources sector represented nearly one-fifth of all production in Australia.

“As an industry, we should take pride in the nation-building role our products have played in many countries around the world, particularly in Asia. Asia’s new cities are built with Australian iron-ore and Australian coking coal. They’re powered by our copper, coal, gas and uranium and their consumer goods rely on our metals.”