BHP posts strong iron ore, copper output

July 17, 2013
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Iron ore remains the company's biggest earner and it produced 169.9 million tonnes in the year, up 7.0 percent despite sharp falls in commodity prices over the past year, although this was slightly below earlier guidance/FILE
Iron ore remains the company’s biggest earner and it produced 169.9 million tonnes in the year, up 7.0 percent despite sharp falls in commodity prices over the past year, although this was slightly below earlier guidance/FILE
SYDNEY, Jul 17 – Global mining giant BHP Billiton on Wednesday announced record full-year production in its key iron ore operations, but its petroleum business was hit by drilling delays in the Gulf of Mexico.

The world’s largest diversified resources company also saw solid increases in copper and coal production in the financial year to June 30, helping its share price rise 2.27 percent to close at Aus$34.19 (US$31.56).

“A strong year of production as two of our major assets, Western Australia Iron Ore and Escondida, exceeded production guidance and annual records were achieved across seven operations and five commodities,” the miner said.

Iron ore remains the company’s biggest earner and it produced 169.9 million tonnes in the year, up 7.0 percent despite sharp falls in commodity prices over the past year, although this was slightly below earlier guidance.

In the quarter to June 30, iron ore output rose 17.7 percent on the previous corresponding period to 47.6 million tonnes. The company forecast production of 217 million tonnes in the 2014 financial year, feeding demand from China and other Asian economies.

This will be aided by expansion of its Jimblebar mine in Western Australia, although the company said the cost of this had risen by Aus$340 million.

Copper production at BHP’s flagship Escondida mine in Chile also jumped, by 28 percent, over the year to 1.1 million tonnes. The company said the stellar performance was expected to be sustained going forward.

Coal output was up 13 percent to 38 million tonnes but total petroleum production was just six percent higher at 235.8 million barrels of oil equivalent. The company had been targeting 240 million barrels.

It blamed extended maintenance and drilling delays at its some of its Gulf of Mexico assets.

BHP has seen profits hit by weak commodity prices and cool Chinese demand. In May chief executive Andrew Mackenzie outlined plans to slash capital spending by almost a fifth, while increasing productivity.

In February BHP posted a 58 percent plunge in first-half net profit to US$4.2 billion due to steep falls in commodity prices.

Goldman Sachs said the production report suggested the company “is pushing its assets a lot harder and increasing profitability, which could mean some upside to earnings at a time when the company is decreasing costs”.

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