This continued growth will be underpinned by emerging economies such as Brazil, China, Russia and India.
During its carbon-steel-materials briefing this week, marketing director of the division Peter Toth said, from London, that a once 800-million-ton-a-year industry was now producing at 1,1-billion tons a year.
Currently, the appetite for steel is being driven by China's rapid urbanisation and industrialisation. But once the boom tapers off, BHP Billiton expects the other so-called Bric countries, Brazil, Russia and India, to follow suit.
Group president of carbon-steel materials Chris Lynch, speaking from Sydney, told media and analysts that this division was a major force of stability in BHP Billiton.
He said that its operations, which have significant mass, have greater price certainty than other commodities.
With many of its iron ore operations located in Australia, it believes that it is in an optimal position to supply China.
He added that the cost pressures that the company felt on the one side were, ironically, the drivers behind demand needs in developing countries.
However, there was pressure on capital costs, which is likely to delay those projects in feasibility and prefeasibility stages.
The division supplies raw materials to the international steel industry. Its products include iron-ore, coking coal, manganese ore and alloys.
It has nine open-cut mines in Australia in its majority, held Bowen Basin. It also has three underground coal mines in Australia, at Illwarra Coal.
Also in Australia, it has a majority stake in the Pilbara iron ore mines.
In Brazil, it has a 50% stake in Samarco, an iron-ore producer.
Its Australian manganese ore producer, Gemco, 60% owned by it, as is Temco, a manganese-alloy producer, also in Australia.
In South Africa, the division has a 60% stake in Samancor, a manganese-ore and ferroalloys producer.
Toth says that global economic conditions for steel consumption were 'very robust', and saw positive growth over the next two years.
Steel is growing at rates of six per cent and seven per cent, which compared to growth of only 0,2% between 1974 and 1995.
In 2006, the industry is expected to grow by 90-million tons, of which 30-million tons will come from outside China.
The following year is expected to see growth of 60-million tons, 20-million tons of which will be external to China.
This year, the industry is expected to grow to 1,1-billion tons, from just over a billion tons last year.
Of this, China will account for 356-million tons, followed by Asia Pacific at 249-million tons.
By 2010, BHP sees Chinese crude-steel production hitting 500-million tons.
“China will continue to be the growth engine of the global steel industry in the short to medium term. India has the potential to provide further medium- to long-term growth,” Toth's presentation said.
In addition, the country is aiming to be a net steel importer, as it now has a policy of not exporting.
Beyond China, growth is seen in other Bric countries.
Russia, a low-cost steel producer, is a major steel exporter. However, domestic steel demand is increasing.
In South East Asia, which imports 50-million tons a year, new steel capacity is planned as the region is seeing strong demand growth.
India, while only using 35 kg of steel a year per person, plans over 50-million tons in capacity additions.
In addition, the construction and automotive sectors are showing growth.
Brazil will also see growth, despite being a low steel consumer.
However, 75% of future demand for iron-ore is likely to come from China.
This year, China agreed to a 19% price hike on the ore, down from last year's 75%, but still well above inflation.
Moreover, Toth adds, “a look at China's domestic iron-ore supply suggests it will not be able to meet long-term demand.”
In 2008, its red-hot economy will consume half the iron-ore produced globally as it absorbs all extra capacity brought on line.
Over 50% of the iron-ore units consumed in 2004 were imported.
Currently, half its iron ore is bought at inflated spot prices, as its contracts are unable to fill the gap.
India's future demand for seaborne iron-ore supply, however, will determine future supply capacity.
Chinese imports of seaborne hard coking coal have been declining.
However, metallurgical coal-demand growth is distributed geographically, mostly driven by demand from Brics and Japan.
Other emerging markets are also likely to grow demand.
The group's Australian operations are, says Toth, well placed to supply this demand.