BHP Billiton hit the lower end of its fiscal 2016-2017 (July-June) guidance for iron ore production, met its recently reduced guidance for metallurgical coal production, and expects output for both the steel making ingredients to grow in the current fiscal year, it said Wednesday.
The miner's total iron ore production for 2016-2017 stood at 231 million wet mt, up 4% year on year but at the bottom of the guidance range of 231 million-234 million wmt, while still seeing record levels, it said in its quarterly report.
Meanwhile, total iron ore production from all projects in which BHP has a stake in, hit record output in 2016-2017.
"Record annual production of 268 million mt (100% basis) at [the Western Australia Iron Ore business] reflects strong productivity improvements across the supply chain as well as the commissioning of a new primary crusher and additional conveying capacity at Jimblebar," it said.
"Following recovery from the wet season, WAIO produced at a record annualized rate of 280 million mt (100 per cent basis) in the June 2017 quarter. The rail renewal and maintenance program was completed in May 2017," it said.
BHP's share of the June quarter production was 60 million wmt, up 8% year on year and 12% from the January-March quarter. The rail renewal and maintenance program was completed in May 2017, it added.
RBC Capital Markets' Sydney-based analyst Paul Hissey said the result was in line with what the bank expected.
WAIO production is forecast to increase to 239 million-243 million wmt for BHP's share, in fiscal 2017-2018, BHP said.
All of BHP's iron ore production currently comes via Western Australia due to the suspension of operations at its Brazilian Samarco mine following a dam failure in 2015.
The company saw an average realized price for iron ore of $58/wmt in fiscal 2016-2017, up 32% from $44/wmt the previous year. For January-June, it averaged $62/wmt, up 41% year on year and 13% from July-December, it said.
"The majority of iron ore shipments were linked to the index price for the month of shipment, with price differentials predominantly a reflection of product quality and market fundamentals," it added.
TROPICAL CYCLONE DEBBIE TAKES TOLL ON MET COAL PRODUCTION
BHP's metallurgical coal output dipped 6% year on year in fiscal 2016-2017 to 39.77 million mt -- excluding Indonesia's Borneo Haju mine following its divestment of IndoMet Coal in October -- with production in the June quarter being hit by Tropical Cyclone Debbie.
The production hit its guidance of 39 million-41 million mt, which BHP lowered from 44 million mt in April in response to the cyclone, which made landfall late March.
Its April-June metallurgical coal production was 8.49 million mt, down 27% year on year and 16% from the March quarter.
"Mine operations recovered quickly after the cyclone, as dewatering infrastructure installed after the 2011 floods worked as designed," BHP said. But, network infrastructure of rail track provider Aurizon was badly effected, and BHP declared force majeure for all Queensland Coal products on April 5 and lifted it on July 1.
Despite the impact of Debbie, BHP's Peak Downs and Saraji mines achieved record annual production, underpinned by improved stripping and mining performance, and utilization of latent wash-plant capacity, BHP said.
Three additional mines were on track for record production prior to the cyclone's arrival, and BHP is forecasting a bounce back in production for fiscal 2017-2018, to 44 million-46 million mt.
Saleable coal production from Peak Downs totaled 6.06 million mt in the fiscal year, up from 5.03 million mt the previous year, and Saraji's saleable coal production rose from 4.21 million mt to 4.73 million mt.
BHP's average metallurgical coal realization was $180/mt for both fiscal 2016-2017 and the six months to June. It was a 117% rise from $83/mt in fiscal 2015-2016 and for January-June 2016, and up 1% from July-December, it said.
The majority of the metallurgical coal exports were linked to the index price for the month of shipment or sold on the spot market at fixed or index-linked prices, it said.
