By Prashant Mehra
(Australian Associated Press)
BHP Billiton has posted solid production growth in the first quarter of the financial year, topping expectations with a seven per cent lift in iron ore output.
The mining giant expects to ship its target of 247 million tonnes of iron ore in 2015/16, and has maintained production guidance across its four other commodities businesses.
BHP produced record volumes at its Western Australia iron ore unit, helped by the ramp-up of the Jimblebar mining hub and improved ore handling plant utilisation at Newman.
Iron ore accounts for more than half of BHP’s revenue and profits.
Of the 67 million tonnes produced at the Pilbara operations in the three months to September, BHP’s share was 61.3 million tonnes.
Deutsche Bank analyst Paul Young said the numbers were slightly ahead of forecast, but the September quarter is typically very good for the company.
“Weather is always a factor later in the year, so I think their annual guidance remains realistic,” he said.
BHP, along with rivals Rio Tinto and Brazil’s Vale, has been ramping up production despite falling iron ore prices in an effort to corner the global market.
Earlier in October, both Rio and Vale reported improved iron ore production for the quarter, despite prices having plunged more than two-thirds in the past four years.
Spot iron ore currently trades around $US52 a tonne.
In September, BHP announced it would slash capital expenditure by a total $US2.5 billion this financial year, amid softening commodities prices that halved its annual profit in 2014/15.
On Wednesday, the company said it will pare back capital expenditure for the petroleum business by six per cent to $US2.9 billion ($A3.99 billion).
Petroleum production declined four per cent during the September quarter to 64.5 million barrels of oil equivalent (mmboe), reflecting its decision to defer development activity at onshore US gas fields.
Despite reducing spend in its most capital intensive business, BHP expects to achieve its production target of 237 mmboe this financial year.
“In petroleum, we continue to reduce costs in both our onshore US and conventional businesses, and will meet our production targets with $US200 million less capital investment,” chief executive Andrew Mackenzie said.
Copper production for the quarter fell three per cent to 377,000 tonnes as it mined less rich ores at majority-owned Escondida mine in Chile.
However, it expects to maintain annual production target of 1.5 million tonnes.
BHP shares rose 24 cents, or one per cent, to $24.23.