Home Commodities BHP Records Iron-Ore Production Decline in 1H — Commodity Comment

BHP Records Iron-Ore Production Decline in 1H — Commodity Comment

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BHP Group, the world’s biggest miner by market value, said first-half production of iron ore and metallurgical coal fell year-on-year, while output of copper, energy coal and nickel increased. The company commented in its second-quarter production report.

First half “iron ore production decreased by 2% to 129 million [metric tons]. Guidance for FY24 remains unchanged at between 254 million and 264.5 million tons.”

At Western Australia Iron Ore, there was “lower production due to the continued tie-in activity for the Rail Technology Programme, and the impacts of the ongoing ramp up of the Central Pilbara hub (South Flank and Mining Area C).”

South Flank is on track to ramp up to full production capacity of 80 Mtpa (100% basis) by the end of FY24. The planned tie-in of the Port Debottlenecking Project is on track to be completed in CY24, following commissioning on 7 December 2023.

At Samarco, “production increased as a result of higher concentrator throughput. Production guidance for FY24 remains unchanged at between 4 million and 4.5 million tons.”

On copper output:

“Total copper production increased by 7% to 894,000 tons. Copper guidance for FY24 remains unchanged at between 1.720 and 1.910 [million tons].”

At Escondida, “increased production was primarily due to higher concentrator feed grade of 0.81%, compared to 0.79% in HY23 and higher concentrator throughput. Concentrator feed grade is expected to be between 0.85% and 0.90% for FY24.”ok

At Pampa Norte, “production at Spence increased 4% to a half year record of 127,000 tons, driven by improved concentrator throughput. Record concentrate production was partially offset by lower cathode production, in line with an expected decline in stacked feed grade. The concentrator plant modifications which commenced in August 2022 are expected to be completed in FY24.”

Cerro Colorado “entered temporary care and maintenance in December 2023, after producing 11,000 tons for the period.”

At Copper South Australia, “production increased by 51,000 tons due to the additional volumes from Prominent Hill and Carrapateena. Successful integration of the Copper South Australia asset has resulted in strong underlying operational performance, including record quarterly copper production at Carrapateena in Q2. Strong smelter performance at Olympic Dam was supported by increased transfers of concentrate from Prominent Hill for processing to higher margin cathode. Olympic Dam also delivered record half year gold production and sales.”

On metallurgical coal output:

“On 15 January, a team member from BEP Engineering & Maintenance, a contracting partner to BMA, was fatally injured in a vehicle incident at Saraji mine. Investigations are underway and we are working closely with the relevant authorities. Operations at Saraji were suspended and are expected to progressively restart over the coming days.

In the period, lower production was as a result of a significant increase in planned maintenance across the asset, the extended longwall move, and geotechnical faulting which impacted underground operations at Broadmeadow until early November. Production was also impacted by an increase in prime stripping to improve value chain stability following depleted inventory positions arising from extended weather impacts and labor constraints over recent years.

Full year production guidance is now expected to be between 23 million and 25 million tons (46 million and 50 million tons on a 100% basis). This guidance excludes Blackwater and Daunia from the date of completion of the divestment which is expected to occur on 2 April 2024. This has been lowered from 28 million-31 million tons (56 million and 62 million tons on a 100% basis), inclusive of Blackwater and Daunia.”

On nickel output:

“Production increased due to improved performance, and a shorter shutdown period at the Kalgoorlie Smelter offsetting downtime at the Kwinana Refinery. Production guidance remains unchanged at between 77,000 and 87,000 tons for FY24.

The nickel industry is undergoing a number of structural changes and is at a cyclical low in realized pricing. Nickel West is not immune to these challenges. Operations are being actively optimized, and options are being evaluated to mitigate the impacts of the sharp fall in nickel prices. Given the market conditions, a carrying value assessment of the group’s nickel assets is ongoing, and a further update will be provided with the release of the financial results on 20 February 2024.”

Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com

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