The boss of BHP Billiton, speaking 48 hours after calling off plans for a £45 million takeover of mining rival Rio Tinto, said today he does not expect BHP to be immune from the huge changes gripping the world economy and commodities markets.

Speaking at the annual meeting of BHP Billiton in Australia, chief executive Marius Kloppers said: "There is no doubt that these are very challenging times, uncertainty in the shorter-term outlook remains." He continued: "If we look at Chinese steel production - the subject of much public discussion recently - we see a decrease of 17% year-on-year and this will eventually flow through to all of us in the industry."

Kloppers, whose authority at BHP Billiton has been tarnished after his fruitless year-long chase after Rio, told shareholders it was not just competition issues with European Union regulators that ruined the deal, nor a global slump in ion ore, coal, copper, nickel and aluminium prices.

He blamed an increasing realisation that a debt-funded union of the two giants - the new group would have had a gearing ratio of 48% - was unsustainable when debt markets are raising borrowing costs.

"A heavily-geared position and reduced capacity to deal with that debt creates unacceptable financial risks for BHP Billiton shareholders," said Kloppers.

EU regulators had signalled that they would not allow the BHP-Rio deal through after representations from steelmakers over the pricing power of a combination that would have had nearly 40% of global iron-ore production and around one-seventh of the world's coal output.