BHP Group, the world’s biggest mining company that is also listed on the JSE, yesterday flagged record iron-ore production in the first half of the year boosted by strong supply chain performance.
In its quarterly activities report released yesterday, iron-ore production from its Western Australia mines came in at 132 million tonnes for the period, a 2% increase from the previous corresponding period, while production in the three months to December rose by 3% on the previous quarter to 66.9 million tonnes.
The Melbourne-based miner also reported strong production of copper and metallurgical coal during the half year ended December, while production of energy coal and nickel both declined, compared with the previous corresponding period.
BHP production guidance for iron ore is unchanged for 2023, but the group said copper production could be at the low due to constraints at Escondida in Chile, the biggest copper mine in the world, which is hit with a strike.
BHP CEO Mike Henry said: “BHP delivered a safe and reliable operating performance in the first half of the 2023 financial year. Employees and contractors across BHP continued to prioritise safety, resulting in the fourth consecutive year without a fatality.”
According to Henry, WA Iron Ore (WAIO) delivered record production for the half year through strong supply chain performance, supported by the ongoing ramp-up at South Flank.
“Copper production at Escondida rose despite road blockades in Chile in the December quarter and the Spence Growth Option (SGO) continued to ramp up, while Olympic Dam’s ongoing smelter performance saw near-record material processing and record gold production.
“In Queensland, coal production was again impacted by heavy rainfall. As foreshadowed, we are seeing the impact of inflation across our global supply chains and continue to focus on productivity and controllable costs,” he said.
Henry said BHP believed China would be a stabilising force when it came to commodity demand in the 2023 calendar year.
“China's pro-growth policies, including in the property sector, and an easing of Covid-19 restrictions are expected to support progressive improvement from the difficult economic conditions of the first half. China is expected to achieve its fifth straight year of over 1 billion tonnes of steel production,” he said.
According to the miner, copper production in the half year was 834 400 tonnes, a 12% increase on the previous corresponding period, while production in the December quarter increased by 3% on the previous quarter to 424 300 tonnes.
The group said Escondida copper production rose by 5% to 511 000 tonnes primarily due to higher concentrator feed grade in the December half.
BHP said Pampa Norte copper production was up by 8% to 147 000 tonnes reflecting the continued ramp-up of the SGO.
“The SGO plant modifications started in August, 2022 and are planned to be completed in the 2023 calendar year. Expected capital expenditure for the works remains unchanged at about $100 million (R1.7 billion) and further studies are ongoing for additional capacity uplift at SGO,” it said.
Olympic Dam copper production increased by 138% to 104 000 tonnes primarily due to the major smelter maintenance campaign in the prior period, BHP told shareholders, BHP said.
It had achieved record gold production owing to “debottle-necking initiatives” implemented in the prior year.
“During the quarter, we continued to progress a number of growth pathways to shape our portfolio towards future-facing commodities and reduce our operational emissions.
"In December, 2022 BHP’s scheme implementation deed to acquire 100% of Australian copper producer Oz Minerals received unanimous support from the Oz Minerals board ahead of a shareholder vote in the coming months,” said Henry.
BHP said metallurgical coal production in the reported period increased by 5% to 13.6 million tonnes, and reached 7 million tonnes in the December quarter, an increase of 4%.
The group said energy coal production for the half-year declined by 24% to 5.5 million tonnes, but increased by 9% in the December quarter to 2.9 million tonnes.
“The New South Wales energy coal operations were impacted by record wet weather conditions, continued labour shortages, planned wash plant maintenance during the December, 2022 quarter, and an increased proportion of washed coal,” it said.
Nickel production for the half-year declined by 2% to 38 400 tonnes and by 14% in the December quarter to reach 17 700 tonnes.
BUSINESS REPORT