Fires hit coal production
BHP says air quality a further risk to operations
SMOKE from the NSW bushfires has already affected BHP’s coal production and the miner is wary of poor air quality further impacting its NSW sites. The miner’s energy coal production was affected in December, when the fires were at their worst, and management is wary of more smoke.
“We are monitoring the situation and if air quality continues to deteriorate then operations could be constrained further in the second half of the year,” management said in a first half trading update.
Energy coal production at
BHP’s NSW sites fell 11 per cent to seven million tonnes (Mt) for the second quarter.
However, a bigger factor was a change in focus on higher quality products. Guidance for the financial year remains unchanged at between 15 and 17 Mt. The bushfires have ravaged the state since October.
They have claimed 21 lives, burned more than five million hectares and destroyed more than 2100 homes.
Meanwhile BHP’s production and cost guidance are unchanged for the financial year, although petroleum production is likely to be at the lower end of the range.
Chief executive Mike Henry told the market BHP delivered solid operational performances across the portfolio.
Petroleum production fell by 9 per cent to 57 million barrels of crude oil equivalent (mboe), but guidance for the 2020 financial year remains unchanged at between 110 and 116 mboe.
Iron ore production for the second quarter, 60 million tonnes, was up by 4 per cent on the same period a year earlier.
Production would have been higher but for car dumper maintenance in October. RBC Capital Markets’ mining analyst Paul Hissey said
BHP’s overall result was a touch softer with petroleum and iron ore offsetting stronger performance at its Escondida site in Chile.
Mr Hissey said RBC preferred BHP to Rio Tinto in the mining space and expected the former’s balance sheet to remain strong.
BHP has six major projects under way in petroleum, copper, iron ore and potash, with a budget of $US11.4 billion.