Following the unprecedented drop in global economic activity due to Covid-19, BHP Group CEO Mike Henry sees a recovery on the horizon, although it will take a few years.

“We’re expecting there’s going to be a sharp contraction in the global economy over this calendar year,” he said Wednesday on CNBC’s “Squawk on the Street.” “We then expect there to be a pretty sharp uptick again next year, so we foresee it taking about a year for the world to get back to the levels of economic activity that existed pre-Covid, and maybe two or three years for the world to get back fully on the track that it would have been on if not for for Covid-19,” he added.

As the world’s largest miner, BHP is heavily exposed to economic booms and busts. One bright spot is China, where Henry said a “pretty solid V-shaped recovery” is underway.

On Monday spot iron ore prices rose to their highest level since 2014, amid an infrastructure boom in China, according to commodity price reporting agency Argus.

In July the nation imported a record 112.65 million metric tons of iron ore — a 24% year-over-year jump — as the government continues to inject money into the economy. 

“The [Chinese] government has stepped in with some stimulus that we expect is going to create further momentum through to next calendar year. So things are looking pretty positive and pretty resilient,” Henry said.

BHP’s results for the year ending June 30, which were released on Aug. 18, showed that iron ore accounted for 48% of the company’s revenue. Given the relatively high-margin nature of the segment, it made up 64% of the company’s earnings before interest, taxes, depreciation and amortization. 

Climate action ‘good’ for BP

ESG investing, or when a company’s environmental, social and governance factors are considered alongside traditional financial metrics, is growing in popularity.  During the second quarter global assets under management in sustainability-focused funds topped $1 trillion for the first time, according to data from Morningstar.

Part of BHP’s operation focuses on coal, meaning environmentally conscious investors could shun the stock.

But Henry said that at the end of the day action on climate change is good for the company since it will build a more resilient world economy. Additionally, he noted that the company is one of the world’s largest providers of nickel, which is used in batteries for electric vehicles.

BHP has said that it plans to be carbon neutral by 2050, but has yet to detail a plan of how it will reach that target.

Shares of BHP are flat this year.

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