How BHP plans to reach its iron-ore target

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BHP, the world’s biggest mining company, says that although its first-quarter iron-ore output fell 3% on planned maintenance and a fire at its Mt Whaleback operation in Australia, it expected to meet its full-year target.

Output was 55.6-million tonnes in the three months to September 30, from 58-million tonnes the year before, Melbourne-based BHP said on Wednesday.

That output missed a 58.8-million tonnes median estimate among four analysts surveyed by Bloomberg.

Full-year output from its Australian mines, including third-party tonnes, remained on course to rise to a range of 275-million to 280-million tonnes in fiscal 2018, BHP said.

Rio Tinto said on Tuesday that it was on track for shipments of 330-million tonnes in 2017 after quarterly cargoes jumped 6% on higher rail capacity.

Imports by China surged to a record in September, topping a previous high that was set in 2015, as the world’s top steel maker’s drive to boost its air quality stoked demand for imported higher-grade and less-polluting raw materials. Copper production surged 14% to 404,000 tonnes, boosted by the ramp-up of the Los Colorados Extension project at Chile’s giant Escondida mine, BHP said.

Output at the Escondida operation hit a more than two-year high in August, according to Chile’s government.

According to a note by Melbourne-based RBC Capital Markets analyst Paul Hissey, the figures reflected a solid result for BHP, with higher copper output helping to offset lower iron-ore volume out of the Pilbara iron-ore unit.

BHP’s share price eased 0.8% to A$27.10 ($21.25) by midmorning on Wednesday in Sydney as the benchmark S&P ASX 200 index gained 0.1%.

The company had agreed in the September quarter to sell a “small portion of the Hawkville acreage” in its shale unit, BHP said in the statement, without providing details.

“Work is under way to exit the remaining onshore US assets for value.”

BHP was in talks with potential buyers, CEO Andrew Mackenzie said in August.

BHP’s shale operations, acquired in a $20bn string of deals in 2011, have been a focus for investor concern and among the targets in an activist campaign led by Elliott Management, which is seeking a wider review of the oil unit. The new chairman of BHP, Ken MacKenzie, is scheduled to address shareholders publicly for the first time at a London annual meeting on Thursday.

Petroleum output declined 8% to 50-million barrels of oil equivalent, which beat a median estimate of 48.3-million barrels.

Production at BHP’s onshore oil and gas assets in the US tumbled 16%.

Source: Bloomberg