BHP hits record iron ore output in Western Australia Oct-Dec, cuts met coal output guidance

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Mining giant BHP ramped up its Western Australia iron ore output to hit a record production rate in the October-December quarter, maintaining its guidance for the commodity for fiscal 2017-2018 (July-June), but some issues impacting operations in Queensland caused it to scale back its metallurgical coal production expectations, the company said Thursday.

BHP’s share of production from its iron ore assets totalled 61.56 million mt in the December quarter, up 3% year on year and 11% from July-September, it said.

At the Western Australia Iron Ore operations, record production at Jimblebar and Mining Area C was offset by the impact of lower opening stockpile levels following the fire at the Mt Whaleback screening plant in June, and planned maintenance in the previous quarter, it said.

“The higher volumes reflect increased plant availability and improved rail performance. Port debottlenecking activities were completed in the December 2017 quarter and will support higher volumes in the second half of the financial year,” it said.

The December quarter production translates to an annualized rate of about 244.2 million mt. The company has maintained its expectation of producing between 239 million mt and 243 million mt in fiscal 2017-2018 via its share of the iron ore assets.

On a 100% basis, BHP is expecting the assets to produce between 275 million mt and 280 million mt, after hitting a record annualized rate of 284 million mt in the December quarter. Despite the strong December quarter output, BHP said that volumes are expected to be weighted to the second half of the financial year (January-June).

BHP is continuing to work with authorities to gain approvals for increasing the system capacity to 290 million mt, it said. Meanwhile, mining and processing operations remain suspended at its Brazilian Samarco mine following the failure of the Fundao and Santarem dams in 2015.

Met Coal production guidance trimmed by 3 million MT

The company cut back its production guidance for metallurgical coal — which comes from its assets in the Australian state of Queensland — for fiscal 2017-2018 from 44 million-46 million mt to 41 million-43 million mt, it said.

BHP blamed the downward revision on challenging roof conditions at Broadmeadow, which are expected to continue through the January-March period, and geotechnical issues triggered by wet weather impact at Blackwater.

Unit cost guidance is also expected to be negatively impacted, which the company is currently reviewing.

The miner’s total metallurgical coal production in the December quarter was 9.69 million mt, which is a 9% year-on-year fall and 8% lower than July-September.

BHP’s Queensland Coal comprises the BHP Mitsubishi Alliance and BHP Mitsui Coal assets in the Bowen Basin in central Queensland. BMA is 50:50 owned by BHP and Mitsubishi Development and operates the Goonyella Riverside, Broadmeadow, Daunia, Peak Downs, Saraji, Blackwater and Caval Ridge mines. It also owns and operates the Hay Point Coal Terminal.

BMC owns and operates the South Walker Creek and the Poitrel mines in the Bowen Basin. It is 80% owned by BHP.

The issues at Broadmeadow and Blackwater were partially offset by record production at the South Walker Creek, Saraji, Caval Ridge and Daunia mines, which was underpinned by improved truck and shovel performance, utilization of latent dragline capacity at Caval Ridge and increased wash-plant feed rates, BHP said.

“The Caval Ridge Southern Circuit project is progressing according to plan, with production expected to ramp up early in the 2019 financial year,” it added.

Source: PLATTS