Iron Ore Exports Remain Weak for BHP

BHP has joined rival Rio Tinto in revealing a weak September quarter performance in its core division – its Australian iron ore export operation in the Pilbara.

BHP said in its September quarter production and sales report that it had failed to match last year’s output for the third consecutive quarter, which helps explain the fair to middling performance of iron ore exports through Port Hedland this year.

BHP said it shipped 70.8 million tonnes in the three months to September 30, 3.5% less than the same period last year and also 5% lower than the three months to June 30 when 72.8 million tonnes were moved.

BHP said the shortfall was due to major maintenance works, a labour shortage and ongoing COVID-19 border restrictions slowed production of the nation’s most valuable export.

BHP shares fell 2% to $38.39 as investors concluded this was not a very positive set of figures.

Unlike Rio though, BHP kept its 2021-22 shipping forecast intact at between 278 million and 288 million tonnes of iron ore.

“BHP’s operations delivered reliably during the first quarter and we completed planned major maintenance activities across a number of our assets,” BHP chief executive Mike Henry said in Tuesday’s report. “We continue to skilfully navigate the ongoing challenges of COVID-19.“

BHP said the slowdown across its flagship Pilbara iron ore assets mainly reflected higher planned maintenance works including on a car dumper at its Jimblebar mine, as well as temporary rail labour shortages. The company said the impact was partially offset by strong mine performance at Yandi.

It comes as rival Rio Tinto, the nation’s biggest iron ore producer, last week reported its shipments had fallen 4% year-on-year and slashed its full-year target due to WA’s labour shortage causing project delays. Rio trimmed its 2021 guidance by around 5 million tonnes.

Copper output fell – again due to maintenance at Olympic Dam in South Australia and forecast lower concentrator feed grades which cut output by 14% at Escondida in Chile.

BHP said copper production was down 7% quarter on quarter and 9% year on year to 376.500 tonnes. This was driven by lower volumes at Olympic Dam due to the commencement of the planned smelter maintenance campaign.

This activity was delayed by approximately one month due to COVID-19 related border restrictions.

BHP’s Petroleum production though rose 2% (higher global prices would have been an added bonus) quarter on quarter and 3% year on year to 27.5 MMboe.

These higher volumes were driven by increased production from Ruby (a new production well in Trinidad and Tobago) and higher seasonal gas demand at Bass Strait.

This was partially offset by lower production at North West Shelf and natural field decline.

Output of metallurgical and thermal coal fell 25% and 6%, respectively, quarter on quarter. For the former, this was due partly to planned maintenance at its coking coal mines in Queensland.

Thermal coal saw lower volumes at its NSW Energy Coal business due to mining in higher strip ratio areas (more overburden had to be removed to get the coal which cut the amount of coal mined in the quarter)

BHP said nickel production dropped 21% quarter on quarter to 17,800 tonnes due to planned maintenance across the supply chain.


About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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