BHP Billiton has once again predicted iron ore prices will soon begin to slide, despite it continuing to be the company's biggest revenue spinner.
Underlying earnings from the division were $US1.7 billion ($1.88 billion) better than the same period in 2013, at $US6.49 billion.
The $US10.99 billion worth of revenue generated was much higher than the $US8.37 billion generated in the same period in 2013.
That result was achieved on the back of a 19 per cent rise in production, better than expected iron ore prices and declines in the Australian dollar against the US. Advertisement
BHP first warned that iron ore prices were past their peak in 2012, when the company abandoned plans to spend close to $US20 billion building an outer harbour at its major iron ore export facility, Port Hedland.
Since then it has sought to grow exports and improve efficiency by removing bottlenecks in its supply chain, and the company said on Tuesday that those efforts had boosted earnings by more than $US300 million.
The company has plans to continue growing iron ore exports from this year's target of 192 million tonnes to eventually reach 270 million tonnes, but chief executive Andrew Mackenzie said he fully expected that growth to come amid lower prices.
''The very strong growth in supply is more than enough to create a bit of an excess and therefore to drive the price lower,'' he said.
Rival iron ore miners Rio Tinto, Fortescue Metals Group and Brazil's Vale are also growing exports and Mr Mackenzie said that wall of supply would likely have an impact on price within a year.
''There may be a few ups and downs in the next quarter or two, perhaps a little bit of recovery in demand, but we still see some issues arising from new supply,'' he said. ''Our conclusion is that there is more supply coming into the iron ore market than there is demand growth.''
After falling consistently since the start of the year, iron ore prices have surprisingly firmed this week, rising on consecutive days to more than $US124 per tonne on Tuesday.
That price is even better for Australian exporters once the currency is taken into account.
Most of Australia's iron ore is bought by Chinese steel makers, and Mr Mackenzie said the Chinese economy could experience some volatility in the near future as the government introduces a tighter monetary climate.
