Ashby spoke to members of the Australia China Business Council in Perth about the on-going strength of the Chinese economy and what it meant, in particular, for BHP's iron ore business in the Pilbara.

He avoided any mention of Rio Tinto and what BHP's play for its fellow Australian miner could mean for iron ore.

However, given the need for the company to spruik the stronger-for-longer hypothesis and woo Rio Tinto shareholders with its bullish views on demand from China, Ashby's emphasis on the growing Chinese economy and how well positioned BHP will be to meet growing demand was not surprising.

"I believe China will continue to play a key global role in iron ore products and as well as many other resource products in the longer term," he said.

China's economy recently surpassed Germany to become the third largest in the world behind the United States and Japan, and next year would pump more money into the global financial system than the US, Ashby said.

The country's GDP growth of 10% per annum had been ongoing for over a decade, and by 2050 more than one billion people in China would live in urban regions. By then, the country would have 150 cities with populations between 1.5 million and 5 million.

As a result, worldwide steel production had grown from 750 million tonnes per year in 2001 to 1.2 billion tonnes in 2006, with much of that growth coming from China, and would continue to grow as the China rapidly expands its infrastructure, Ashby said.

Ashby also emphasised the importance of building long-term relationships with Chinese customers.

"For many years we've worked with our customers to continue to commercialise new products, and these relationships are the hallmark of the iron ore business over many decades," he said.

However, Ashby steered clear of the freight differential issue, which could be a major bone of contention between BHP and its Chinese steelmaker customers in the upcoming negotiations over the benchmark iron ore price.

Landed iron ore from Brazil fetches about 50% more per dry metric unit than iron ore from Australia due to shipping costs, and there has been increasing speculation that BHP will push for higher iron prices for Australian ore to reflect this price gap.

BHP recently said the iron ore market should move to a more transparent pricing system, which could also be a thorny issue with Chinese steelmakers, especially if it means price hikes.

The major has also suggested it could sell more iron ore onto the spot market, where prices are roughly double those of the current benchmarks.

This morning, however, Ashby focused on the company's plans for its massive expansion in the Pilbara to meet the massive growth from China, including the Rapid Growth Project Four, which will see BHP's capacity increase to 155 million tonnes per annum by 2010.

Beyond that, the company's Quantum expansion plans are dependent on increasing Chinese demand.

"We expect market conditions to be quite healthy and [with Quantum] we're targeting 300 million tonnes by the middle of next decade," Ashby said.

In the last financial year BHP produced 107Mt of iron ore.

The company will also spend $50 million a year on iron ore exploration for the next five years.

BHP's focus would increasingly turn towards developing projects in emerging economies and nations, Ashby added.

"We're also looking to expand our global footprint and there are [iron ore] business development activities in Brazil, West Africa and India," he said.

BHP already owns a 50% stake in Brazilian iron ore pellet producer Samarco, which has a production capacity of around 21.6Mt a year.

Ashby refused to answer media questions this morning.

BHP's shares were last trading at $43.06, down 14c in early afternoon trade.