JSE-listed BHP produced a strong fourth quarter to cap off a year of significant progress,while it yesterday warned of tough times ahead due to high commodity prices.
In its operational review released yesterday the diversified miner said it had increased production across its portfolio of commodities during the June quarter.
Iron ore production for the period was 64.2 million tons, an 8 percent increase, which showed record production from the Mining Area C hub, the continued ramp-up of the South Flank operation and the improved supply chain performance.
Total copper production decreased by 4 percent to 1.57 million tons. Production for the 2023 financial year was expected to be between 1.6 and 1.8 million tons.
Nickel production in the June quarter was up by 1 percent to 18 800 tons, but dropped by 14 percent in the full year to 76 800 tons.
BHP chief executive Mike Henry said: “Broader market volatility continues and we expect the lag effect of inflationary pressures to continue through the 2023 financial year, along with labour market tightness, and supply chain constraints.
“Over the year ahead, China is expected to contribute positively to growth as stimulus policies take effect, however, the continuing conflict in the Ukraine, the unfolding energy crisis in Europe and policy tightening globally is expected to result in an overall slowing of global growth. Our strong focus on safety, operational reliability, cost control and social value will help us navigate these challenges and continue to deliver for all of our stakeholders.”
He said BHP produced a strong fourth quarter to cap off a year of significant progress.
“We delivered record full-year sales volumes at our iron ore business in Western Australia as a result of reliable operational performance and the South Flank project, which continued to ramp up.
“In copper, Escondida in Chile had record material mined and near-record concentrator throughput, while Olympic Dam in South Australia performed strongly in the fourth quarter after planned smelter maintenance,” he said.
Metallurgical coal production in the June quarter increased by 3 percent to 8.1 million tons. Coal production was up by 52 percent to 3.9 million tons.
However, wet weather had impacted across most of the BHP Mitsubishi Alliance (BMA) operations and labour constraints including Covid-19 related absenteeism.
“Queensland metallurgical coal delivered strong underlying performance for the quarter in the face of significant wet weather. BHP is assessing the impacts on BMA economic reserves and mine lives as a result of the increase in coal royalties by the Queensland Government.
“The near tripling of top end royalties has worsened what was already one of the world's highest coal royalty regimes, threatening investment and jobs in the state,” Henry said.
BHP said full year production guidance for iron ore and energy coal were achieved as were revised guidance for copper and metallurgical coal. But full year nickel production was lower than revised guidance due to a smelter outage in the June 2022 quarter.
Henry said the $5.7 billion (R90.7bn) Jansen potash project in Canada was tracking to plan and BHP was working to bring first production forward to 2026.
“Also during the year, we merged our petroleum business with Woodside, completed the sales of BMC and Cerrejón, and decided to retain New South Wales Energy Coal until the cessation of mining in 2030 subject to relevant approvals. We also unified our corporate structure, and added to our global options in copper and nickel,” he said.
The share price by 4.22pm was 2.09 percent lower at R429.05. The share has risen 96.23 percent in the past five years.
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