BHP lowers guidance for copper and iron ore production

The FTSE 100 company said total copper production guidance had narrowed to between 1,700 and 1,785 kt, however guidance for Olympic Dam reduced to approximately 135 kt following a slower-than-planned ramp-up after the major smelter maintenance campaign.

Iron ore production guidance was reduced to between 272 and 274 Mt on a 100% basis, which the board said reflected car dumper reliability issues.

Group copper equivalent production was expected to increase by 6% in the 2018 financial year.

BHP’s board said the exit process for onshore US was progressing to plan, with bids expected by June and transactions potentially being announced in the first half of the 2019 financial year.

In petroleum, the company increased its footprint in the northern extension of the Wildling prospect in the US Gulf of Mexico through the acquisition of 33.33% interest in the Samurai prospect.

It also secured an option to purchase an additional 10% interest in the Scarborough development.

The BHP board said “all major projects” under development were tracking to plan.

Petroleum production in the year-to-date to 31 March totalled 143 MMboe, an 8% decline year-on-year, which BHP said was a natural field decline, partially offset by improved well performance and positive trial results in onshore US.

Copper production was ahead 37% in the year-to-date at 1,290 kt, with increased volumes at Escondida supported by the ramp-up of the Los Colorados Extension project.

The company’s iron ore production eked out growth of 2% to 175 Mt, with record production at Jimblebar and Mining Area C partially offset by impacts from Cyclone Joyce in January and unplanned car dumper maintenance.

Metallurgical coal production fell 2% to 31 Mt, with BHP explaining that Blackwater operations had stabilised and were expected to return to full capacity in the next quarter.

Good progress was also made through the fault zone at Broadmeadow.

Energy coal production was down 4% in the year-to-date at 20 Mt, which was blamed on unfavourable weather impacts and inventory build at New South Wales Energy Coal, and higher strip ratios at Cerrejón.

“BHP remains on track to achieve six per cent volume growth for the 2018 financial year,” said CEO Andrew Mackenzie.

“Strong performance in copper was underpinned by the Los Colorados Extension project at Escondida and higher utilisation rates at Pampa Norte.”

Mackenzie said that more than offset the slower-than-expected ramp-up of Olympic Dam during the quarter following planned smelter maintenance.

“Incremental improvements across our operations from debottlenecking and increased throughput delivered record production in iron ore.

“Our exit from onshore US is progressing to plan with bids expected by June 2018.”