Cyclones cut BHP production
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.