Iron ore posts a profit
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,.