BHP CEO Andrew Mackenzie
Photo by: Bloomberg
PERTH (miningweekly.com) – Mining giant BHP Billiton CEO Andrew Mackenzie has expressed optimism about the outlook for commodity prices, reporting “early signs” of market rebalancing.
“Fundamentals suggest both oil and gas markets will improve over the next 12 to 18 months. Iron-ore and metallurgical coal prices have been stronger than expected, although we continue to expect supply to grow more quickly than demand in the near-term,” he said on Wednesday, announcing the group’s September quarter production results.
BHP reported a decline in petroleum, copper and energy coal production and stated that production from its iron-ore and metallurgical coal assets remained stagnant.
Petroleum production in the September quarter fell by 15% on the previous corresponding period, to 55-million barrels of oil equivalent, as onshore US liquid volumes decreased by 38%, to 8.3-million barrels of oil equivalent, as a result of the continued reduction in activity at the Black Hawk operation and natural field decline in Hawkville.
Crude oil, condensate and natural gas liquids production for the quarter was also down by 21%, while conventional liquid volumes were down by 8%.
Copper production for the period under review declined by 6%, to 355 000 t, as production from the Escondida mine, in Chile, decreased by 6% to reflect lower grades, and the Olympic Dam operation, in South Australia, was struck by a state-wide power outage in September, causing production to decrease by 26%.
While power at the operation has been safely restored, BHP stated that operations were in the process of restarting and would be back to full capacity in the December quarter. BHP added that it was still reviewing its 200 000 t full-year guidance for the Olympic Dam operation.
Meanwhile, iron-ore production remained unchanged during the three months to September at 67-million tonnes on a 100% basis, with BHP’s share of production accounting for 58-million tonnes. Mining and processing operations at the Samarco project, in Brazil, remained suspended following the tailings dam failure in November last year.
At its coal assets, BHP reported a 1% increase in metallurgical coal production, which reached 10.5-million tonnes during the quarter under review, while energy coal production decreased by 4% to 6.8-million tonnes.
BHP noted that while Queensland coal production remained broadly unchanged during the quarter under review, New South Wales energy coal production declined by 15% on the back of heavy rainfalls and the rescheduling of the mine plan, based on individual pit economics.
Mackenzie told shareholders that the group’s full-year production and unit cost guidance remained unchanged, except for the Olympic Dam operation.
He added that the combination of steadier markets, continued capital disciple, improved productivity and increased volumes in copper, iron-ore and metallurgical coal should support strong free cash flow generation in the financial year.