During a conference call yesterday, Kloppers said the company sent marketers to coking coal mines in China almost a decade ago and had been waiting for the country to overwhelm its resources in the commodity.

While he does not expect this calendar year to see an exact repeat of China’s booming demand for metallurgical coal in 2009, BHP is expecting solid growth over the long term, hence its recent commitments to the Caval Ridge mine and the expansion of the Hay Point Coal Terminal.

Kloppers said the coking coal market had not really grown much in the past decades at roughly 1% per annum, but he saw the connection of the coking coal market to China’s market as a “hugely important event”

Factoring in the growth of India’s steel industry, Kloppers said BHP had altered its forecast for metallurgical coal demand “materially higher than 1 per cent growth going forward”

He also revealed BHP would keep its stake of the Maruwai metallurgical coal project in Indonesia, although the company had previously flagged a potential sale.

Kloppers maintains a cautious outlook on world economies due to “unsustainable stimulus measures governments had been forced to implement”, but added that China’s steel production was actually higher than before the GFC.

“This growth in Chinese steel demand was driven by strong domestic construction and industrial demand on the back of government programs and increased liquidity,” he said.

“Many economies, including China, are still dependent on stimulus.”

BHP chief financial officer Alex Vanselow said the company decreased its cash cost by 4% in the recent half but noted this was mainly due to lower energy and fuel prices.

He expects increasing energy prices will eventually flow through to BHP’s costs.