BHP hits iron ore records, puts targets on copper discovery

The mining giant has given the first real indication of the size of its Oak Dam copper discovery in South Australia, as the company hit iron ore production records.

BHP has lifted its iron ore output guidance for the current financial year after hitting record sales and production levels from the Pilbara, with the company also giving its first peek at the likely size of its new copper discovery in South Australia.

BHP released its June quarter production results on Thursday, saying its Pilbara mines had shipped 285 million tonnes in for the full financial year, selling 281 million tonnes and building up 4 million tonnes in stockpiles at its Chinese port facilities.

The record figure was matched by record output of 285 million tonnes from its mines, in the middle of its 278 to 290 million tonne range.

But BHP said its operations would likely lift output in the current year, to 282 to 294 million tonnes.

The company’s Olympic Dam copper mine in South Australia also hit an annual production record of 212,000 tonnes of copper, and refined gold of 186,000 ounces.

That suggests the long-lagging operation is finally hitting the operational stability BHP boss Mike Henry has demanded before further investment in Olympic Dam can be justified, and comes as BHP works to integrate the assets acquired through its $9.6bn takeover of OZ Minerals.

BHP said OZ Minerals’ Prominent Hill and Carrapateena mines contributed a combined 20,000 tonnes of copper to its South Australian output – now rebranded, with Olympic Dam, as Copper South Australia – in the two months between the close of the acquisition and the end of June.

BHP’s Olympic Dam.

BHP said it has so far paid out $US100m to $US150m in transaction and integration costs associated with the buyout, with the June quarter seeing the first testing of copper concentrate from Prominent Hill in the Olympic Dam smelter.

The mining major also gave the first insight into its expectations for its Oak Dam discovery – first announced with great fanfare in 2018, when drilling intercepts grading better than 6 per cent copper were recorded.

BHP’s drill rigs have been turning at the project ever since, but the company is still to put an initial resource on the record.

But the company said on Thursday it had set an “exploration target” of 500 million to 1.7 billion tonnes for the deposit, at an average grade of 0.8 to 1.1 per cent copper.

While BHP did not give any targets for gold or uranium content at Oak Dam, or their likely grades, at this stage the BHP commentary suggests the deposit is more likely a bigger repeat of OZ Minerals’ Carrapatena deposit than Olympic Dam.

In 2013, when OZ Minerals issued an update to the mineral resource at Carrapateena, after acquiring the project the year before, it put a total mineral resource on the project of 760 million tonnes at 0.78 per cent copper – slightly smaller than Oak Dam’s exploration target at a later stage of exploration.

Output from BHP’s Queensland coal operations was flat for the year, despite foul weather continuing to hit the sector through the year, at 28 million tonnes. And output from its Mt Arthur thermal coal mine lifted 3 per cent to 14.1 million tonnes.

Mr Henry said the improvement in output at its iron ore operations would be driven by the ramp up of its South Flank mine this year.

“WAIO shipped record volumes on the back of productivity in its supply chain, rail network and car dumpers, while South Flank completed its deployment of autonomous haul trucks in May and is on track to ramp up to full production in the next 12 months,” he said.

“Olympic Dam’s improved reliability and productivity delivered record annual output in copper, gold and silver, and the integration of OZ Minerals into our South Australian copper business is expected to lift production to between 310,000 and 340,000 tonnes in FY24.”

BHP shares closed up 2c to $44.69 on Thursday.

Originally published as BHP hits iron ore records, puts targets on copper discovery