BHP iron ore output tops estimates as outage crimps copper

BHP has booked record half-year production within its WA iron ore division, as it lowers copper guidance.

BHP Billiton’s Olympic Dam copper, gold and uranium mine in South Australia. (Aaron Bunch/BHP)

BHP Billiton has delivered a record half-year result within its WA iron ore division, but has been forced to revise down copper production guidance on the back of a statewide power outage in South Australia affecting its Olympic Dam project.

In its production report for the six months to December 31, the mining giant (BHP) said its Western Australian Iron Ore unit had achieved record production of 117.6 million tonnes (Mt), up 4 per cent on the prior year.

Investors welcomed the news, with BHP shares jumping 3.26 per cent to $27.89, marking the highest close since June 2015.

For the December quarter, BHP logged output of 60Mt, topping market expectations for 59Mt.

The output rise was timely given iron ore prices jumped to a two-year high above $US80 in the December quarter, more than double where they stood in February.

The group left its full-year iron ore guidance unchanged at between 228 and 237Mt.

Full-year guidance was also retained at its petroleum and coal divisions, while copper forecasts were trimmed on the back of outages at its Olympic Dam operation.

The company noted half-year copper production of 712 kilotonnes and December quarter production of 357kt, with both figures down 7 per cent on the prior year.

It follows a crippling statewide power outage in South Australia that impacted Olympic Dam operations for around two weeks over September and October.

BHP now anticipates full-year copper output of 1.62 Mt, off 2 per cent from prior expectations.

“We have performed well during a period of higher prices, with record iron ore volumes achieved at WAIO,” chief executive Andrew Mackenzie said.

“Our simpler organisational structure has freed our assets to focus on what matters most and to deliver safer and more productive operations.”

The miner is endeavouring to step-up its energy investment, detailing a $US820 million exploration program for the current financial year in the wake of positive drilling results and the purchase of the Trion oilfield in the Gulf of Mexico.

“In petroleum, we will accelerate our counter-cyclical oil exploration efforts this year,” Mr Mackenzie said.

“Our successful Trion bid leaves us in a leading position to develop the newly opened Mexican acreage in the Gulf of Mexico, where we can leverage our core expertise.

“We are encouraged by recent positive drilling results at the LeClerc well in Trinidad and Tobago and the Caicos well in the Gulf of Mexico.”

BHP still has a cloud hanging over its head in the form of compensation for the collapse of a tailings dam in Brazil in 2015, with its Samarco joint venture recently agreeing a framework for settlement this year.

However, the miner said today it remained unable to provide an update on the “ongoing potential financial impacts” from the Samarco dam failure.