BHP hits targets despite virus downturn

MAJOR mining group BHP says production levels are beginning to recover from the economic shocks caused by the coronavirus pandemic.

In an operational update lodged to the Australian Stock Exchange on Tuesday morning, the company noted it had met full-year production targets for iron ore, metallurgical coal and its copper and thermal coal assets.

The company said petroleum and gas production was lower than expected during the COVID-induced economic downturn, fuelled by reduced gas demand in the June quarter.

“We expect to continue to generate solid cash flow through the cycle and we remain confident in the outlook for demand for our products over the medium to long term,” BHP chief executive Mike Henry said.

In its update, BHP said the financial costs associated with the pandemic were expected to be up to $US150m for the second half of the 2020 financial year, stemming from the market plunge and imposed global lockdown measures.

The company said its economic predictions were in line with the International Monetary Fund’s forecasts of a global economic contraction of 4.9 per cent in the 2020 calendar year. BHP is expecting the world economy to be 6 per cent smaller in 2021.

It also noted operational levels would be affected by government “hibernation policies” and how smooth economic recovery efforts would be after COVID-19.

Iron ore production levels for the June quarter stood at 67 megatonnes, an 11 per cent increase compared to the previous corresponding quarter.

For the 2020 financial year, BHP’s iron ore production was 248 megatonnes, a 4 per cent increase compared to the 2019 financial year. The miner produced 12 megatonnes of metallurgical coal, a 26 per cent rise on the third quarter.

BHP said the increase was due to higher levels at Queensland Coal, which included record productions levels at its Broadmeadow, Caval Ridge and Poitrel sites.