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BHP Group on track to meet 12-month production targets

BHP says the Western Australia iron ore business continued to perform strongly as the state’s first major Covid-19 wave was being navigated. | Bloomberg

BHP says the Western Australia iron ore business continued to perform strongly as the state’s first major Covid-19 wave was being navigated. | Bloomberg

Published Apr 22, 2022

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BHP Group, the world’s biggest mining company that is also listed on the JSE, was on track to meet the group’s forecasts by the end of its third quarter, CEO Mike Henry said yesterday.

Iron ore production from its Western Australia mines came in at 66.7 million tons for the period, flat from a year earlier, but, according to Reuters, this was lower than a consensus estimate of 70mt compiled by Visible Alpha.

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BHP joins most of the world’s major mining groups that reported lower-than-expected production in the first quarter of 2022, including Anglo American, Vale, Antofagasta and Rio Tinto.

“Amid record-high prices, our Queensland metallurgical coal business delivered strong underlying performance and benefited from better weather in the quarter,” Henry said in a nine-month operational review to March 31, 22.

He said the Western Australia iron ore business continued to perform strongly as the state’s first major Covid-19 wave was being navigated. Full-year volume and cost guidance in copper was on track.

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“Spence production is increasing, and the Olympic Dam smelter is performing strongly as it returns to full production following planned maintenance. These gains have been more than offset at Escondida by impacts from Covid-19 and public road blockades in Antofagasta, which are reflected in a revision to overall production guidance,” he said on the group’s website.

The Jansen potash project was on track, with good progress on the shafts, in the underground mining systems and at the port.

The merger of the petroleum assets with Woodside had progressed and was set for completion in June 2022, while the divestment of the BMC business to Stanmore should complete in May 2022.

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Henry said market volatility and inflationary pressures had increased due to the Russian invasion of Ukraine and the group continued to work to mitigate cost pressures through focus on operational reliability and cost discipline.

“While we expect conditions to improve during the course of the 2023 calendar year, we anticipate the skills shortages and overall labour market tightness in Australia and Chile to continue,” he said.

Production guidance for the 2022 financial year was unchanged for iron ore, metallurgical coal and energy coal. Full-year copper production guidance was lowered to between 1 570 kt and 1 620 kt, reflecting lowered production guidance for Escondida.

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Nickel production guidance was lowered to between 80 and 85 kt due to Covid-19 related labour constraints.

Full-year unit cost guidance for Western Australia Iron Ore, Escondida and Queensland Coal remained unchanged.

Full-year unit cost guidance for New South Wales Energy Coal had been increased to between $76 and $81 (R1219) per tonne, reflecting a targeted increase in the proportion of higher quality coal to capture more value from the record high prices for higher-quality thermal coal.

The divestment of BHP’s interest in BHP Mitsui Coal (BMC) to Stanmore Resources was expected to complete on May 3, 2022.

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