BHP's record iron ore production runs into port constraints
The world’s biggest miner, BHP, is producing iron ore at a record rate but has trimmed its production guidance for fiscal 2018 because of system constraints at the port.
BHP's iron ore production rose 2 per cent for the first nine months of fiscal 2018 to 203 million tonnes. Production for the March quarter of 67 million tonnes (on a 100 per cent basis) was a solid 8 per cent higher in 2018 than for the same quarter in 2017.
But the miner has slightly reduced its iron ore production guidance for fiscal 2018 to between 272 million and 274 million tonnes (down from 275 million-280 million tonnes).
BHP said iron ore production was 6 per cent lower in the March quarter compared to the December quarter of 2017, due to the impact of Cyclone Joyce in Western Australia in January as well as “unplanned car dumper maintenance”. A car dumper is the mechanism that helps the train release the iron ore out of the rail car.
“With the system constraint now at the port, a program of work is underway to improve car dumper availability and performance,” BHP said in its operational review for the first nine months of fiscal 2018, released on Thursday morning.
Production guidance remains unchanged for petroleum, metallurgical coal and energy coal. Total copper production guidance for fiscal 2018 was narrowed to between 1700 and 1785 kt. Previous copper production guidance for fiscal 2018 had been 1655 to 1790 kt.
BHP's total copper production for the first nine months of fiscal 2018 jumped 37 per cent to 1290 kt, thanks largely to the performance of the Escondida mine in Chile, the world's biggest copper mine. Production surged after the start of the Los Colorados Extension project in September 2017, as well as the resolution of a lengthy strike that affected production in the first half of calendar 2017 at Escondida.
At BHP's vast Olympic Dam facility in South Australia, copper production fell 18 per cent to 94.7 kt for the first nine months of fiscal 2018, compared to the first nine months of fiscal 2017.
BHP said the lower copper production for the period was due to a "planned major smelter maintenance campaign" at Olympic Dam that occurred in the first half of the current financial year.
"[Olympic Dam copper] production guidance for the 2018 financial year has been reduced from 150 kt to approximately 135 kt due to a slower than planned ramp-up during the March 2018 quarter. A return to full capacity is now expected over the course of the June 2018 quarter," BHP said.
BHP's chief executive, Andrew Mackenzie, said the miner was "on track" to deliver 6 per cent volume growth for fiscal 2018.
Mr Mackenzie said BHP had recorded a "strong performance in copper", which was underpinned by operations at Escondida and higher utilisation rates at Pampa Norte.
"This more than offset the slower than expected ramp-up of Olympic Dam during the quarter following planned smelter maintenance," he said.
"Incremental improvements across our operations from debottlenecking and increased throughput delivered record production in iron ore."
The miner's quarterly report also delivered the company's latest update on the process for the sale of its US onshore shale assets, a decision that has been welcomed by investors, and one that will allow the company to claw back billions of dollars from an investment that turned out to be costly and ill-timed.
BHP said the process was "progressing to plan, with bids expected by June 2018 and transactions potentially being announced in the first half of the 2019 financial year".