Cy­clones cut BHP pro­duc­tion

Pilbara News - - News - Nick Evans

BHP Bil­li­ton has cut the top end of its iron ore pro­duc­tion guid­ance af­ter the cy­clone sea­son slashed 7.6 mil­lion tonnes from March quar­ter out­put.

The min­ing gi­ant told share­hold­ers last week it was con­fi­dent it would eas­ily beat the bot­tom end of its ear­lier guid­ance, of 265mt to 275mt, but was not likely to hit the top end of the fore­cast.

BHP’s Pil­bara mines pro­duced 62.2 mil­lion tonnes of ore in the March pe­riod, down from 69.7 mil­lion in the three months to the end of De­cem­ber. As a re­sult, it nar­rowed its pro­duc­tion guid­ance to 268mt to 272mt.

In ad­di­tion to poor weather, BHP was hit by train de­rail­ments in the pe­riod, mean­ing lim­ited port stock­piles added only 336,000t to its to­tal ex­ports.

De­spite the weather im­pact, BHP said it man­aged a ninemonth ex­port record from the Pil­bara, which was up 4.3mt to 197.1mt.

The new guid­ance re­duces the pos­si­bil­ity of BHP be­ing forced to leave its port op­er­a­tions idle in June it fails to win ap­proval for li­cence amend­ments al­low­ing it to ex­tend its 170 mil­lion tonne-a-year ex­port cap by 5mt.

The De­part­ment of En­vi­ron­ment Reg­u­la­tion last week ex­tended the com­ment pe­riod for BHP’s ap­pli­ca­tion by a week, to May 5, amid a ris­ing lo­cal cam­paign against dust lev­els in Port Hed­land’s west end led by Port Hed­land busi­ness own­ers and prop­erty de­vel­op­ers.

It is un­der­stood BHP is con­fi­dent it will win the lim­ited in­crease by June, though un­cer­tainty re­mains over its am­bi­tion to lift the cap to 290mtpa.

BHP is also push­ing for­ward with its plans to re­place its 80 mil­lion-tonne-a-year Yandi mine with a new de­vel­op­ment ad­ja­cent to its Min­ing Area C op­er­a­tions.

Yandi, north-west of New­man, will be ex­hausted in five to 10 years and will likely be re­placed by the planned South Flank de­vel­op­ment — which BHP had said was threat­ened un­der plans by former Na­tion­als leader Bren­don Grylls for a $5/t levy on iron ore.

A full en­vi­ron­men­tal re­view of the 26km-long mine is likely to be re­leased for public com­ment within weeks, and BHP is be­lieved to be in the late stages of fi­nal­is­ing fea­si­bil­ity stud­ies on South Flank, with a view to put­ting the multi­bil­lion-dol­lar de­vel­op­ment up for board ap­proval in 12 to 18 months.

The new guid­ance re­duces the pos­si­bil­ity of BHP be­ing forced to leave its port op­er­a­tions idle in June.

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