BHP Billiton lowers guidance for Western Australian Iron Ore

The FTSE 100 firm said it was on track to deliver an average unit cost improvement of 14% across its major assets, with productivity gains continuing to be realised.

It also maintained its full-year production guidance for petroleum, copper and coal.

Guidance at Western Australian Iron Ore was reduced, however, by 10 Mt to approximately 260 Mt.

BHP’s board blamed adverse weather and the beginning of an accelerated rail network maintenance programme for this.

In petroleum, a $640m exploration programme was now planned for the 2016 financial year, to fund additional access and testing of the company’s future growth opportunities.

The board confirmed all of its major projects under development were tracking to plan, with the Escondida Bioleach Pad Extension project completed as planned during the March quarter.

"The productivity of our company continues to improve notwithstanding the disruption largely caused by adverse weather this quarter,” said chief executive Andrew Mackenzie.

“Over the last 12 months, we have taken a number of steps to strengthen BHP Billiton, including asset sales and the deferral of investment for long-term value. While these measures will reduce our output this year, they have increased our focus on our highest-quality operations and will support stronger margins and returns,” he added.

Mackenzie said there was still potential to significantly grow the value of the company, with a simpler organisational structure promoting greater efficiency, rapid sharing of best practice and adoption of new technology.

"Debottlenecking our assets at very low cost will generate high returns and substantial value.

“We have a pipeline of projects in copper and oil that allow us to bring high-margin volumes to market when the time is right. And as others cut back on exploration, our investment will go further and help create new options for the future,” he concluded.