BHP Trims Annual Iron Ore Target After Cyclone -- Update
17 Aprile 2019 - 03:22AM
Dow Jones News
By Robb M. Stewart
MELBOURNE, Australia--BHP Group Ltd. (BHP.AU) warned of slightly
higher iron-ore mining costs after flooding in the wake of a
cyclone last month.
The company reported that production of the steel ingredient
from its mines in Australia's remote Pilbara region slipped in the
last quarter. It cut its annual output target, affirming an
expected 6 million to 8 million metric ton impact from Tropical
Cyclone Veronica last month.
While BHP's scaled-back guidance was relatively modest, it adds
to the hits to iron shipments which have supported market prices.
Iron ore prices rallied this year following output cuts by Vale SA
(VALE) in Brazil after a dam disaster. On Tuesday, Rio Tinto PLC
(RIO.LN) warned of ongoing problems shipping iron ore from its port
in Western Australia after damage from the cyclone, prompting it to
also reduce its production target for the year.
BHP, the world's biggest mining company by market value, said it
now expects production from the mines in controls in Pilbara of
between 265 million and 270 million tons in the year through June,
below its earlier target of 273 million-283 million.
While Veronica caused no major damage to BHP's facilities,
efforts to ramp up shipments from its port in Western Australia
were slowed by flooding and assessments of its equipment. With
lower volumes, including a 3% fall in its iron ore output to 56.1
million tons in the latest quarter, it now expects higher iron ore
production costs. It forecasts the cost of producing a ton of iron
ore for the full year to be below US$15, compared with less than
US$14 previously.
BHP, which has in recent years focused on cutting costs and
narrowing in on operations with a longer lifespans, had flagged a
stronger second-half performance after setbacks in the first six
months of the financial year. These included disruptions after a
train derailment in a remote part of Australia, an acid-plant
outage at the company's Olympic Dam copper mine in Australia and a
plant fire at its Spence mine in Chile.
Chief Executive Andrew Mackenzie said the mining company
achieved a strong operational performance in the last quarter
despite the impact of adverse weather in Australia and Chile. BHP
maintained production guidance for its petroleum, copper and coal
operations and said all major projects under development were
tracking to plan.
Oil and gas output in the three months through March hit 29
million barrels of oil equivalent, a rise of 3% year-over-year,
while production of energy coal was up 11% to 7 million tons.
However, steel-making metallurgical coal production was down 5%
on-year at 10 million tons, and copper production fell 8% to
420,000 tons.
Write to Robb M. Stewart at robb.stewart@wsj.com
(END) Dow Jones Newswires
April 16, 2019 21:07 ET (01:07 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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