BHP posts rare fall in iron ore production but says boost is coming

A major train accident and wild weather have delivered BHP a rare fall in iron ore production but the mining major has flagged a record haul for the year ahead.

BHP has reported a rare fall in full-year iron ore exports following a major train accident and wild weather but flagged they are on track to hit a new record in the year ahead.

The mining major produced 270 million tonnes of the key steel making ingredient in the year to June, it reported this morning.

That was down from 275 million tonnes in 2017-18 and follows the miner’s Pilbara operations being interrupted by a runaway train derailment in November and Cyclone Veronica in March.

The fall in annual production was the first in at least 15 years.

But BHP has forecast production to rise to 273 million to 286 million tonnes this financial year.

BHP has to suspended its Pilbara rail operations in November after a runaway train laden with iron ore travelled 92km with no one on board before it was deliberately derailed.

That puts it on track for a new record and takes its Pilbara operations close to their theoretical maximum operating capacity of 290 million tonnes annually.

Shares in the Melbourne-based miner were up by about 1.5 per cent in early trade today.

BHP shipped out 71.1 million tonnes from the Pilbara for the three months to June.

The figure was below a UBS estimate of 72.6 million tonnes, but up 12 per cent on the March quarter.

Production across its suite of commodities broadly recovered from March, which is typically the weakest quarter due to Australian weather conditions.

BHP chief Andrew Mackenzie

“Generally speaking, it’s just a little bit softer than we expected, although it’s strong sequentially,” UBS analyst Glyn Lawcock said.

“If you look at their guidance it’s highlighting that they aren’t really growing their volumes, so that means price is key going into next year.”

Miners have benefited from iron ore prices at five-year highs, after a dam disaster in Brazil led to a global shortage of the steelmaking ingredient.

Analysts expect some of the windfall profits to be passed on to shareholders when miners report their profits next month.

wit h AAP