Dumper car repairs force cut to forecast
MINING giant BHP Billiton has trimmed its full-year iron ore production guidance after it was forced to carry out unexpected maintenance work at its Western Australian operations.
The Melbourne-based miner yesterday said it expects to produce between 272 million and 274 million tonnes of the key steelmaking ingredient this financial year.
The new full-year target is down from 275 million to 280 million tonnes BHP had previously told investors to expect.
The world’s biggest diversified mining company said it dug up 57.7 million tonnes of iron ore during the three months to March, an 8 per cent rise on the same period a year earlier.
But its March quarter haul was 6 per cent lower than what it produced in the final three months of 2017 as it was forced to carry out repairs on its dumper car equipment.
Dumper cars are massive machines which pick up and empty rail cars filled with iron ore.
BHP’s iron ore operations in Western Australia’s Pilbara produced a record 175 million tonnes for the nine months to March.
Iron ore accounts for about 40 per cent of the company’s earnings.
BHP said it had gained the regulatory approval needed to expand its port capacity at Port Hedland in Western Australia to 290 million tonnes.
It expects to achieve this annual rate of production by the end of next financial year.
BHP also lowered its 2018 financial year copper production guidance for its Olympic Dam mine in South Australia from 150,000 tonnes to 135,000 tonnes as production
ramped up more slowly than expected after maintenance work.
The miner’s overall copper production doubled to 457,000 tonnes in the three months to March compared to the same period a year earlier as it benefited from an expansion project at its operations in Chile.
The move by BHP to cut its iron ore production forecast came as the commodity’s price jumped after China’s central bank made it easier for banks there to lend money.
The price of iron ore, the nation’s biggest export, lifted 3.1 per cent overnight Wednesday to $US66.45 a tonne.
The People’s Bank of China announced it would reduce the amount of money commercial banks have to keep with it in reserve.
It was the first time China’s central bank has cut its reserve requirements and is expected to free up about $US200 billion in funds when it comes into effect later this month.
“Iron ore rose after China cut the bank reserve requirement, raising hopes of greater economic activity and thus higher steel demand,” CommSec chief economist Craig James said.
Shares in BHP rose 2.8 per cent to close at $30.92 yesterday.