BHP reaffirms full year production guidance after soft start
BHP has reaffirmed its production guidance across all commodities after a flat start to the year, with analysts calling its first quarter result a ‘modest miss’.
BHP has reaffirmed its production guidance across all commodities after a flat start to the year, with analysts calling its first quarter result a “modest miss”.
The global miner’s copper operations distinguished themselves by posting improved production numbers against the same quarter last year, up 11 per cent, however they were still 3 per cent lower than the last quarter of FY23.
Iron ore production was 3 per cent down on last year’s first quarter, while metallurgical coal was 16 per cent down.
Energy coal production was 38 per cent higher at 3.6 million tonnes while nickel was 2 per cent lower.
BHP also announced that Whitehaven Coal had won the race to buy its Daunia and Blackwater coal mines in Queensland for an estimated $3bn.
BHP managing director Mike Henry said the production figures were lower due to major planned maintenance across the Australian assets, plus maintenance and an extended longwall move at the BMA metallurgical coal operations.
“First quarter operational performance was highlighted by a 11 per cent uplift in copper production from the previous year,’’ Mr Henry said.
“After completing a typically busy quarter of planned maintenance particularly at our Australian assets, we are on track to achieve full year production and unit cost guidance. “BMA in particular was impacted by planned maintenance, an extended longwall move and low opening inventory following drawdowns in the prior year.
“Jansen Stage 1 in Canada is approximately one-third complete after a productive summer.
“In South Australia, we saw strong operational performance in the first full quarter of production for the new province, as we bring our copper assets together and progress further exploration drilling.”
In South Australia, where BHP operates the Olympic Dam polymetallic mine and the recently-acquired Carrapateena and Prominent Hill copper and gold mines, production increased 44 per cent against the first quarter last year, in the first full quarter of the operation of the integrated assets.
At Olympic Dam BHP reported the highest amount of material milled since FY15, and the company has eight drill rigs active at Olympic Dam and another 10 at the nearby Oak Dam prospect.
At the Western Australian iron ore operations production was 3 per cent lower at 63.2 million tonnes and sales were up 2 per cent.
“Production was lower due to tie-in activity for the Rail Technology Program, the ongoing ramp up and maintenance at the Central Pilbara hub (South Flank and Mining Area C), and the timing of track renewal maintenance,’’ BHP said.
BHP said the South Flank expansion project remains on track to ramp up to full production of 80 million tonnes per year by the end of this calendar year.
“Guidance for FY24 remains unchanged at between 250 and 260Mt (282 and 294Mt on a
100 per cent basis),’’ BHP said.
“We are building inventory at the mines while we complete planned maintenance and with South Flank continuing to ramp up, volumes are expected to be weighted to the second half.’’
The Jansen Stage 1 potash project in Canada remains on budget and on track to deliver first production by the end of calendar 2026, BHP said.
Citi analysts said the production numbers were a “modest miss” versus its expectations.
“Versus Citi expectations, September quarter copper, iron ore, and nickel were 1 per cent, 2 per cent and 4 per cent lower, respectively,’’ the broker said in a note to clients.
“Metallurgical coal was 25 per cent lower. That said, total copper production increased by 11 per cent to 457kt, given the OZ Minerals acquisition and an 11 per cent uplift in Escondida production.’’
BHP shares were 7c higher at $45.64.
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