Resources group BHP Billiton (BIL) has reported annual production records across 10 operations for the year ended June 2012 despite the challenging environment.
Describing the operation’s performance as “robust”‚ the group reported its 12th consecutive annual production record in iron ore as Western Australia Iron Ore shipments rose to an annualised rate of 179 million tonnes in the June 2012 quarter (100% basis).
Record annual metallurgical coal production was achieved at Illawarra Coal. However‚ Queensland Coal production remained constrained as a result of industrial action and heavy rainfall.
The successful integration and further development of the group’s onshore US shale liquids and gas assets contributed to a 40% increase in petroleum production in the 2012 financial year.
It also reported an 11% increase in copper production in the June 2012 quarter and established strong momentum in its base metals business.
BHP reported record annual production in alumina at the Alumar refinery (Brazil)‚ which contributed to a 4% increase in total alumina production in the 2012 year. Production at Worsley (Australia) is expected to increase during the 2013 financial year as the efficiency and growth project ramps up towards full capacity.
Aluminium production was lower than all comparable periods as potline capacity at Hillside in South Africa remained curtailed following a major unplanned outage in the March 2012 quarter. Operations are expected to progressively return to full technical capacity during the 2013 financial year.
“Despite our competitive position on the cost curve‚ our integrated Aluminium business continues to be challenged by weaker prices and underlying cost pressure‚” it said.
At Escondida (Chile)‚ copper production increased by 22% as mining activities progressed towards higher-grade ore‚ consistent with the mine plan. This strong performance was also supported by quarterly and annual material mined‚ mill throughput and copper production records at Antamina (Peru) following the successful commissioning of the expansion project.
Escondida copper production is forecast to increase by about 20% in the 2013 financial year and the successful completion of both the Escondida Ore Access and Laguna Seca de-bottlenecking projects will facilitate a rise in Escondida copper production to over 1.3 million tonnes (100% basis) in the 2015 financial year.
Lead and silver production for the 2012 financial year was in line with the prior period‚ while zinc production at Antamina declined as mining progressed through a copper-rich ore zone.
Uranium production for the 2012 financial year was broadly in line with the prior period.
Diamond production was lower than all comparable periods‚ as expected. At EKATI (Canada)‚ production is forecast to remain constrained in the medium term as the operations extract lower-grade material‚ consistent with the mine plan.
BHP Billiton announced a review of its diamonds business during the December 2011 quarter and this process is ongoing.
In addition‚ the sale of the group’s 37% non-operated interest in Richards Bay Minerals (South Africa) to Rio Tinto is progressing and remains subject to final regulatory approvals.
The successful replacement of the Line 1 furnace at Cerro Matoso (Colombia) in the September 2011 quarter led to a modest increase in annual nickel production.
The Nickel West Mt Keith Talc Redesign Project and Kwinana hydrogen plant (Australia) were both commissioned in the 2012 financial year. However‚ despite improved refinery performance‚ a strong Australian dollar and weak nickel price continued to place pressure on Nickel West operating margins.
Western Australia Iron Ore shipments rose to a record annualised rate of 179 million tonnes in the June 2012 quarter (100% basis). Consistently strong operating performance‚ the ramp-up of Ore Handling Plant 3 at Yandi‚ dual tracking of the company’s rail infrastructure and additional ship loading capacity at Port Hedland contributed to the record result.
Western Australia Iron Ore production in the 2013 financial year is forecast to increase about 5% from the previous year.
Consistently strong operating performance and improved plant availability at both GEMCO (Australia) and Hotazel (South Africa) underpinned annual manganese ore production and sales records in the 2012 financial year.
In manganese alloy‚ the termination of energy-intensive silica manganese production at Metalloys (South Africa) and the temporary suspension of production at TEMCO (Australia) resulted in substantially lower alloy production in the period. TEMCO is expected to return to full capacity towards the end of the September quarter.
A modest increase in metallurgical coal production was achieved in the 2012 financial year despite numerous operating challenges. Record annual production at Illawarra Coal (Australia) followed successful commissioning of the West Cliff Coal Preparation Plant upgrade project.
Queensland Coal (Australia) production remained constrained during the June 2012 quarter largely as a result of industrial action. This disruption to production and sales has led to significant margin compression for the group’s leading Queensland Coal business.
BHP Billiton also announced the indefinite closure of the Norwich Park mine (Australia) during the June 2012 quarter following a review of the mine’s profitability.
In July 2012‚ force majeure was lifted across all Billiton Mitsubishi Alliance (BMA) sites. In addition‚ BMA and the unions reached a framework agreement that should guide the finalisation of the BMA Enterprise Agreement. Further work is under way to finalise local mine site details.
Energy coal volumes were higher than all comparable periods‚ with annual and quarterly production records achieved at two of BHP Billiton’s export-orientated operations‚ Cerrejon Coal (Colombia) and New South Wales Energy Coal (Australia).
The RX1 Project at New South Wales Energy Coal delivered first production during the June 2012 quarter‚ significantly ahead of schedule. This project capitalises on strong demand for high ash coal in BHP’s key growth markets‚ the group said.
In its crude oil‚ condensate and natural gas liquids division‚ lower liquids production for the 2012 financial year reflected downtime at its nonoperated facilities in the Gulf of Mexico (USA) and natural field decline‚ particularly at Pyrenees (Australia).
Mad Dog (USA) was offline for the full financial year while Atlantis (USA) was shut in for an extended period of scheduled maintenance during the June 2012 quarter. Weather-related downtime in the Gulf of Mexico also contributed to lower production in the period.
Onshore US liquids production increased by 10% to 3.8 million barrels in the June 2012 quarter. More than 80% of the group’s onshore US drilling activity was focused on the liquids-rich Eagle Ford shale and Permian Basin at the end of the period.
“Our conventional business will benefit from the recommencement of production at Mad Dog and Atlantis in the September 2012 quarter‚” BHP noted.
A strong performance at Angostura (Trinidad and Tobago) and the successful integration of the group’s onshore US business led to higher natural gas production in the 2012 financial year. - I-Net Bridge