Johannesburg - BHP Billiton, the largest mining company, has raised its full-year iron ore production forecast after first-quarter output of its biggest-earning unit jumped 23 percent.
Production of the steelmaking material leapt to 48.8 million tons in the quarter to September, from 39.8 million tons a year earlier, Melbourne-based BHP Billiton said yesterday. That compares with the 47.8 million tons median estimate of six analysts surveyed.
The increase coincides with rising demand from steel mills in China, the biggest buyer of the raw material, where imports gained to a record 75 million tons in September.
Iron ore is the biggest contributor to BHP Billiton’s profit, comprising 43 percent, or $12.2 billion (R119.7bn), of its earnings before interest, tax, depreciation and amortisation in the 2013 financial year.
“You will continue to see these guys push out more iron ore,” Chris Drew, an analyst in Sydney with Royal Bank of Canada, said. “You’ve seen an upgrade to iron ore expectations for the year, which should support earnings.”
BHP Billiton stock jumped 2.35 percent to A$37.05 (R351.18) in Sydney, a two-month high. The JSE-listed shares leapt 3.82 percent to close at R307.94.
The company has outperformed its global peers this year, slipping 0.1 percent compared with a 23 percent decline in the 110-company Bloomberg world mining index.
Total iron ore output would rise to 212 million tons this year from its earlier forecast of 207 million tons, after improvements in the supply chain at its West Australian mines delivered record production. Jimmy Wilson, the iron ore head, said last week that the company saw a “strong” outlook for steel production underpinning demand.
Iron ore entered a bull market in July as users in China replenished stockpiles that shrank in March to the lowest level since 2009. Prices at Tianjin measured by The Steel Index have rallied 22 percent from this year’s low on May 31 to $134.10 a ton on Monday.
Earlier this month Morgan Stanley boosted forecasts for the first and second quarters of next year. Iron ore would average $130 a ton in the first three months, $5 more than previously forecast, and $120 in the second quarter, up from $117.
“Our pursuit of productivity gains and operating excellence is already yielding strong results,” chief executive Andrew Mackenzie said yesterday. “There is no better example than in our iron ore business.”
BHP Billiton’s petroleum output was a record 62.7 million barrels of oil equivalent, up 2 percent from a year earlier.
Production of coking coal rose 14 percent on the previous year to 10.2 million tons, and thermal coal output gained 3 percent to 19.6 million tons.
Copper output advanced 6 percent to 403 300 tons. - Bloomberg