Australia is getting spooked, after global mining, oil and gas company BHP Billiton revealed observing signs of a further weakening demand of iron ore from China, instantly kicking the Australian dollar to plummet against the U.S. dollar to below $1.0600.

In the Global Iron Ore and Steel Conference in Perth, Ian Ashby, BHP Billiton's iron ore division president, announced the inevitable - "Growth is going to flatten off."

Ashby further noted that demand for the commodity used to fabricate steel will plunge "to single digits if it is not already there."

The pronouncements of BHP Billiton immediately ignited the Australian dollar to fall a fifth of a US cent to $US1.0595. Mining shares consequently dropped. BHP Billiton fell as much as 14 cents, or 0.4 per cent, to $35.21. Ditto with Rio Tinto, which were trading down as much as 35 cents, or 0.5 per cent for the day, at $65.50. Shares of Australia's third-largest miner, Fortescue Metals, slashed off 8 cents, or 1.3 per cent, to $5.90.

''Growth will be less than what it has been, those times have been exceptional,'' he said. The growth boom in iron ore exports of Australia to China had largely been fueled by China's massive appetite of the raw commodity.

Ashby said BHP Billiton will ultimately respond accordingly to the slowing demand, but did not provide details as to how this will be carried out.

"We haven't slowed down any of the work that allows us to make a decision."

In the next decade alone, it is forecast that more than 100 million rural-based Chinese will move in towns and cities, which will spur heavy construction requirements for housing and infrastructure.

However, earlier this month, China had slashed its 2012 growth target to an eight-year low of 7.5 per cent, a forecast seen more as doom by the mining companies not only in Australia but around the world.

Even Rio Tinto, a rival of BHP Billiton, confirmed the latter's observations, but remained confident China will be able to avoid a sharp drop in economic growth.

"Although the rate of GDP growth in China is more immediately slowing, we remain confident on the basis of the figures we have seen, of a soft landing, with solid growth for this year," David Joyce, managing director of expansion projects, said in a speech.

Chinese demand for the steel making ingredient will temper down, but will continue to move on, according to Perth-based Intierra Resource Intelligence, as it is set to reach 3.5 billion tonnes a year by 2030.

Australia registered an A$673 million or US$711 million trade deficit in January, versus a surplus of A$1.33 billion in December. The culprit, according to the Australian Bureau of Statistics, was the strong decline in iron ore shipments.