BHP CEO Andrew Mackenzie
PERTH (miningweekly.com) – Diversified giant BHP on Wednesday announced that the company had met or exceeded the production expectations for its commodities during the 2018 financial year, but warned of a $650-million financial impact related to the Samarco dam failure, in Brazil.
“We have delivered a strong finish to the 2018 financial year, with an 8% increase in annual production and record output at Western Australian iron-ore, Queensland coal and our Spence copper mine, in Chile,” said BHP CEO Andrew Mackenzie.
Iron-ore production for the full year was up 3% on the previous financial year, to 238-million tonnes, with the June quarter delivering 64-million tonnes, a 10% increase on the March quarter.
BHP said the record annualised production rate of 289-million tonnes a year achieved in the June quarter reflected increased productivity across the supply chain following the completion of the rail reliability project, and improved car dumper performance.
Production records were also set at the Jimblebar and Newman operations.
Petroleum production for the full year was down 8% on 2017, to 192-million barrels of oil equivalent, with 49-million barrels of oil equivalent produced in the last quarter.
The miner has flagged further expected decreases in petroleum volumes for 2019, to between 113-million and 118-million barrels of oil equivalent, as a result of additional downtime from planned dry dock maintenance at Pyrenees and natural field decline across the portfolio.
Given BHP’s intention to exit its onshore US assets, no annual guidance has been given for these assets, but the miner said that production was expected to run broadly consistent with the second half 2018 production, until the divestment has been completed, likely at the end of the 2018 calendar year.
Meanwhile, copper production in the full year was up 32% on the previous financial year, to 1.75-million tonnes, with BHP producing 463 000 t in the June quarter, a 10% increase on the March quarter.
Copper production from Escondida increased by 57% during the financial year, reflecting a full year of production following the industrial action in 2017. The increased output was also supported by the start-up of the Los Colorados extension project, in September last year.
Copper production from the Olympic Dam operation, in South Australia, fell by 18% in the full year, to 137 000 t, as a result of a planned major smelter maintenance campaign in the first half of the 2018 financial year, and a slower than planned ramp-up. The operation returned to full capacity in the June quarter, and production is expected to increase to between 200 000 t and 220 000 t in the 2019 financial year.
BHP on Wednesday reported that metallurgical coal production or the full year increased by 7%, to 43-million tonnes, and by 16% in the June quarter, to 12-million tonnes.
The miner reported record quarterly production at the Queensland coal operations following improved performance at the Blackwater and Broadmeadow operations, as well as higher feed rates at Caval Ridge.
Production records were also set at the South Walker Creek and Poitrel operations.
Energy coal production remained consistent in the 2018 financial year, at 29-million tonnes, but increased by 48% in the June quarter, compared with the previous quarter, to 9-million tonnes.
Record production was reported at BHP’s New South Wales energy coal operations, underpinned by improved stripping fleet performance.
BHP in 2018 approved a number of development projects, including a $2.9-billion spend for the South Flank sustaining iron-ore project, in the Pilbara, and a $122-million increase in the budget of the Jansen potash project, to $2.7-billion.
At the end of the year, the miner had five major projects under development with a combined budget of $10.6-billion over the life of the projects.
“We further simplified the portfolio with the announced divestment of Cerro Colorado in Chile and Gregory Crinum in Australia, and our investment in South Flank supports our ability to supply low cost, high quality products into Asia,” Mackenzie said.
“Good prices and our culture of continuous improvement give us positive momentum into the 2019 financial year.”
The miner, meanwhile, warned of a $650-million impact to the 2018 financial results, from the Samarco dam failure.
BHP, its joint venture partner Vale and the federal government of Brazil, as well as the states of Espirito Santo and Minas Gerais, and the Public Prosecutors have agreed to an arrangement to settle a 20-billion real civil claim, enhance community participation in decisions related to the remediation and compensation programmes, and to establish a process to renegotiate those progress and to progress the settlement of a 155-billion real civil claim.
BHP in June also announced a further $211-million financial support for the Renova Foundation and Samarco, until the end of December, which consisted of $158-million to the foundation, that will be offset against the group’s provision for the Samarco dam failure, as well as a short-term loan facility of up to $53-millionto be made available to Samarco.