Iron ore posts a profit

Pilbara News - - Election 2017 - Nick Evans

BHP Bil­li­ton has de­liv­ered Bren­don Grylls more am­mu­ni­tion in the war of words over the Na­tion­als leader’s planned iron ore rev­enue rise, book­ing a big lift in profit from its WA iron ore busi­ness as the March State elec­tion looms.

Last week’s half-year fi­nan­cial results show BHP’s Pil­bara iron ore divi­sion un­der­pinned a strong re­sult for the global min­ing gi­ant, de­liv­er­ing $US4.1 mil­lion in earn­ings be­fore in­ter­est, tax, de­pre­ci­a­tion and amor­ti­sa­tion — up 52 per cent com­pared with the first half of last fi­nan­cial year.

That was de­spite iron ore vol­umes lift­ing only 4 per cent, to 136 mil­lion tonnes, and rev­enue ris­ing 30 per cent to $US6.8 bil­lion on the back of an in­creased of $US12 a wet met­ric tonne lift in the aver­age re­alised price for its prod­uct, to $US55/ wmt.

The com­pany said the bulk of the ad­di­tional earn­ings were the re­sult of im­proved pric­ing, with in­creased vol­umes de­liv­er­ing $US77 mil­lion to the net im­prove­ment, and sav­ings in con­trol­lable costs of $US106 mil­lion.

The stronger Aus­tralian dol­lar will also have an im­pact on its full-year re­sult, with BHP re­jig­ging its guid­ance for cash pro­duc­tion costs. Its Pil­bara cash costs fell to $US15.05/t from $US15.21/t in the same pe­riod of 2015. The com­pany flagged full-year costs of $US15/t, up from ear­lier guid­ance of $US14/t, due to the stronger-than-ex­pected lo­cal cur­rency.

Rio Tinto also de­liv­ered a strong re­sult from its Pil­bara iron ore op­er­a­tions in its full-year results this month, lift­ing un­der­ly­ing af­ter-tax profit for the divi­sion on the back of the strong re­cov­ery in com­mod­ity prices in the De­cem­ber half.

To­gether the pair have de­liv­ered strong ad­di­tional prof­its on the back of the surg­ing iron ore price,.

BHP says the bulk of the ad­di­tional earn­ings were the re­sult of im­proved pric­ing. Pic­ture: WA News

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