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BHP BILLITON SAYS that while its mining operations have held up better than most in the face of economic adversity, it won’t be immune from the effects of slowing demand.

"Our financial strength and low position on the cost curve mean that we are better placed than our competitors to respond to fluctuating demand for our products," BHP’s chief executive, andchemical engineer Marius Kloppers said at the company’s annual general meeting. Unlike many of its competitors, BHP has not made any sweeping cuts in its mining operations, with the exception of an iron ore mine in Brazil. The company is relatively shielded because a large share of its production is used to meet long-term contracts. But slowing demand, particularly from China, will eventually affect all mining companies and BHP will not be an exception, he warned.

"There is no doubt that these are very challenging times, uncertainty in the shorter-term outlook remains and we do not expect to be immune from the changes in the world economy," he said, adding that if prices fall far enough to start making some of its mines unprofitable, the company will not hesitate to temporarily close those mines.

Analysts say that BHP’s most vulnerable asset is the $2.1b Ravensthorpe nickel mine in Western Australia, which they warn could quickly turn unsustainable at the current nickel price. BHP recently wrote down the value of Ravensthorpe, as well as its nickel operations at Yanbulu, because of the low nickel price.