Top global miner BHP Billiton is still keen on new mergers and acquisitions in the near term as changes tend to unwind in the world mining industry.

Undeterred by recent failed attempts to takeover other businesses such as that of Potash, BHP Billiton CEO Marius Kloppers is optimistic that the high acquisition price of potential targets will not last long.

Asked if mergers and acquisitions were off the agenda, he said: "No. Cycles changeIn six months' time or a year's time, something else may come up, the situation may change."

Kloppers added that although costs may escalate, iron ore prices will remain strong in the next two years with the strong demand from China and India.

He was bullish on the near-term outlook for iron ore prices due to the strong demand from India and China.

"But what I can say is there are certain products in our portfolio, particularly in iron ore...which looks very, very good over the next three, six and nine months," Mr Kloppers told the ABC's Inside Business program in an interview recorded after the company reported a record first-half profit of $US10.7 billion.

"Simply put, over the next 12, 18 months, perhaps two years, there's not a substantial amount of new capacity coming on, and it's more an issue of the supply side rather than the demand side," he said.

Mr Kloppers said the sector was yet to recover from decisions made during the global financial crisis.

"A lot of companies cut back capacity during the global financial crisis. We're now two-and-a-half years on and normally that capacity would have delivered, but the investment was just not enough," Mr Kloppers said.

His counterpart at rival Rio Tinto was more specific a week ago, forecasting that tight supplies would keep iron ore prices high in the near term, but prices would fall below $US100 a tonne from current record highs around $190 a tonne when mine expansions are completed in 2014 and 2015.

BHP announced this week it would spend $US80 billion on mine developments and expansions over the next five years, and Mr Kloppers said based on expected returns on those projects, it should be able to post compound growth of 5-6 percent a year for "many many years".

"For us it's a question of where cost structures go, but I feel very comfortable that we're going to have healthy margins going forward," Mr Kloppers said.

op global miner BHP Billiton is still keen on new mergers and acquisitions in the near term as changes tend to unwind in the world mining industry.

Undeterred by recent failed attempts to takeover other businesses such as that of Potash, BHP Billiton CEO Marius Kloppers is optimistic that the high acquisition price of potential targets will not last long.

Asked if mergers and acquisitions were off the agenda, he said: "No. Cycles changeIn six months' time or a year's time, something else may come up, the situation may change."

Kloppers added that although costs may escalate, iron ore prices will remain strong in the next two years with the strong demand from China and India.

He was bullish on the near-term outlook for iron ore prices due to supply constraints.

"But what I can say is there are certain products in our portfolio, particularly in iron ore...which looks very, very good over the next three, six and nine months," Mr Kloppers told the ABC's Inside Business program in an interview recorded after the company reported a record first-half profit of $US10.7 billion.

"Simply put, over the next 12, 18 months, perhaps two years, there's not a substantial amount of new capacity coming on, and it's more an issue of the supply side rather than the demand side," he said.

Mr Kloppers said the sector was yet to recover from decisions made during the global financial crisis.

"A lot of companies cut back capacity during the global financial crisis. We're now two-and-a-half years on and normally that capacity would have delivered, but the investment was just not enough," Mr Kloppers said.

His counterpart at rival Rio Tinto was more specific a week ago, forecasting that tight supplies would keep iron ore prices high in the near term, but prices would fall below $US100 a tonne from current record highs around $190 a tonne when mine expansions are completed in 2014 and 2015.

BHP announced this week it would spend $US80 billion on mine developments and expansions over the next five years, and Mr Kloppers said based on expected returns on those projects, it should be able to post compound growth of 5-6 percent a year for "many many years".

"For us it's a question of where cost structures go, but I feel very comfortable that we're going to have healthy margins going forward," Mr Kloppers said.