BHP to Trump: Protectionism will hurt growth

US President Donald Trump’s protectionist stance is likely to erode economic growth over the longer term and therefore demand for raw materials, the chief executive of the world’s biggest miner, BHP Billiton, said on Tuesday.
Mining stocks rallied on expectations Trump’s policies would lead to increased infrastructure spending in the US and, just before Trump took office, Mackenzie had a meeting with the president-elect, which officials said was productive.
Andrew Mackenzie said it would be good news for the resources sector if Trump could unlock “the challenge of bringing more money into infrastructure.”
But he said Trump’s protectionist stance was likely to be bad for growth and therefore ultimately for commodities demand.
“When you take the medium-term view, it is hard to fault the value of free trade,” Mackenzie told reporters, adding it created, for instance, better sharing of ideas to cut costs for the consumer, therefore stimulating demand.
“Without a greater commitment to that (free trade), you are not going to get back to 4 percent gross domestic product (GDP) growth and that is the kind of growth rate you need to continue to lift people out of poverty and to fuel a decent demand for commodities going forward.”
Long term, almost everyone would be a loser from protectionism, Mackenzie said, although the interim gains of Trump’s policies could include a reopening of the debate about coal.
BHP, which reported a $3.20 billion net half-year net profit and boosted its dividend payment on Tuesday after benefiting from a rebound in commodity prices, is the world’s biggest producer of coking coal, used in steelmaking.
It has invested in carbon capture and storage technology to prevent the release of carbon dioxide emissions from coal-burning into the atmosphere.
“People have probably been too quick to condemn coal,” Mackenzie said.
He said nuclear power’s failure to experience a renaissance following the Fukushima disaster in Japan meant coal had a role in providing cheap and convenient base-load power, although it also needed to be clean.
“It is possible you will get a re-set of that debate, which I think has been unduly negative toward coal,” he said.
“I would like to think as a result of that, (there could be) greater alignment around governments to mature carbon capture and storage technology to the same point as we are maturing renewables technology.”

Source: Arab News