As expected BHP has been forced (like Rio Tinto) to cut iron ore production after Cyclone Veronica closed its export facilities at Port Hedland in late March.
In Rio’s case, two fires in screening areas at its Port Lambert export terminals in the Pilbara in January and earlier this month, plus the impact of Cyclone Veronica forced the cuts from the lower end of a guidance range of 338 million and 350 million tonnes to 333 million to 343 million.
The cut its forecast production to 265 million – 270 million tonnes, from 273 million tonnes. That’s a fall of 6 to 8 million tonnes.
BHP’s March quarter production dipped 3% to 56 million tonnes. Rio’s quarterly output fell by 14% to 69.1 million tonnes.
BHP’s facilities did not sustain major damage as a result of the cyclone, but its port ramp up was slowed by localised flooding, the processing of wet material and equipment assessment, according to the company.
BHP shares fell 2.7% to $38.30 on news that Vale, its big Brazilian competitor, will restart a 30 million tonnes a year iron ore mine later this week. the mine has been stopped from producing by court action following the January 25 mine dam disaster at a nearby mine in Vale’s southern mining system.
The weather impact also pushed up BHP’s iron ore unit costs to below US$15 ($A21) per tonne from previous guidance of less than $US14 ($A20) per tonne because steady costs are being spread across a smaller tonnage.
“During the March 2019 quarter, we had a strong operational performance despite weather impacts across Australia and Chile,” chief executive Andrew Mackenzie said yesterday.
“We approved Atlantis phase three and now have five major projects under development. Those projects, our work on transformation, technology and culture, and our successful petroleum and copper exploration and appraisal programs will grow value and returns for years to come.”
Metallurgical coal production was broadly flat at 31 million tonnes (MT) Mt (54 Mt on a 100% basis). Guidance for the 2019 financial year remains unchanged at between 43 and 46 Mt (75 and 81 Mt on a 100% basis).
Energy coal production was broadly flat at 20 Mt. Guidance for the 2019 financial year remains unchanged at approximately 28 to 29 Mt.
Total copper production fell 3% to 1.245 million tonnes. Guidance for the 2019 financial year remains unchanged at between 1.645 and 1.740 million tonnes
Escondida copper production fell 6% to 848,000 tonnes “as expected lower copper grades were partly offset by record concentrator throughput,” BHP said.
Production guidance remains unchanged at between 1.120 and 1.180 million for the 2019 financial year, with volumes expected to be towards the lower end of the range.
Nickel West production fell 13% cent to 59,000 tonnes as operations were suspended following a fire at the Kalgoorlie smelter in September 2018.
BHP says the smelter returned to operation on 1 October 2018, with final repairs and ramp up completed in the March 2019 quarter. Production guidance for the 2019 financial year remains unchanged and is expected to be broadly in line with the 2018 financial year.
At Olympic Dam in South Australia copper production increased 225 to 115,000 as a result of the major smelter maintenance campaign in the prior period, which was partially offset by an unplanned acid plant outage in August 2018.
“Following completion of the acid plant remediation works, surface operations ramped up between October 2018 and February 2019. Production guidance remains unchanged at between 170,000 and 180,000 for the 2019 financial year, with volumes expected to be towards the lower end of the guidance range.
Total petroleum production was flat at 92 million barrels of oil equivalent (MMboe). Guidance for the 2019 financial year remains unchanged at between 113 and 118 MMboe, with volumes expected to be towards the upper end of the guidance range.