BHP Billiton missed some analysts' forecasts with its first quarter production figures yesterday, thanks in part to problems in the Australian coal infrastructure chain and maintenance work that cut output.
Seven of the company's major commodities experienced lower production.
The shares fell to a day's low of $45.27, helped by initial concerns about the production figures and lower copper and oil prices on world markets Monday night.
But a recovery in some prices yesterday and another look at the figures encouraged the shares higher and they ended the day at $46, up 8c.
Some of BHP's major operations were affected by scheduled maintenance and expansion works, the company said in the statement to the exchange. Seven of BHP's 19 commodities had lower output levels in the quarter, with Olympic Dam in South Australia impacted by maintenance work that cut production of gold, copper and uranium.
Nickel production dropped 13% because of planned maintenance at the Kalgoorlie nickel smelter and the Yabulu refinery in Australia.
Rival Rio had to own up to cost pressures and lower output for some of its commodities in its 2007 half year report in August and in its September quarter report earlier this month.
But the prices of BHP and Rio are being boosted by expectations of sharp prices rises for iron ore in 2008 contract talks due to start with major Asian buyers later this month.
There have been estimates from broking analysts in Australia of a rise of 30% to 50%, which helps explains the enormous upward move in the company's share price in the past month.
The company revealed it had a record quarter for the glamour mineral at the moment, iron ore. That seems to be the headline these days.
Other highlights from the quarter included:
* Quarterly production record achieved for iron ore, underpinned by strong demand. Western Australia Iron Ore's Rapid Growth Project 2 (Australia) achieved nameplate capacity in the current quarter.
* Quarterly production records achieved at the Worsley, Western Australia Iron Ore, Illawarra Coal, Hunter Valley Coal (all Australia), Hillside (South Africa), Samarco (Brazil), and Cerrejon Coal (Colombia) operations.
* Quarterly production record achieved for natural gas and natural gas liquids at Bass Strait (Australia) and silver at Escondida (Chile) and Antamina (Peru).
* Petroleum production was in line with prior periods reflecting strong facility and reservoir performance offsetting natural field decline.
* Major operations were impacted by scheduled maintenance and tie-in activity associated with expansion projects.
BHP produced 25.867 million tonnes of iron ore in the quarter, up 7% from the corresponding quarter in 2006. This followed the build up of output from its Rapid Growth Project 2 in Western Australia and a record performance at the Samarco mine in Brazil. But this was less than some analysts had forecast.
BHP is moving to lift iron ore output to 300 million tonnes by 2015, to meet increasing demand for the metal from China.
Copper output climbed 23% in the quarter to 307,800 tonnes (from the September quarter of 2006), due to the continuing build up of the new Escondida sulphide leach and Spence projects in Chile.
But that was 10% down on the June quarter due in part to unplanned smelter maintenance at Olympic Dam in South Australia.
Nickel output fell 13% to 38,600 tonnes due to scheduled maintenance at its Kalgoorlie Nickel Smelter and Yabulu operations in Australia while uranium output from Olympic Dam rose 18% from the September quarter last year to 933 tonnes. But that was also down 6% from the June quarter because of lower grades and scheduled maintenance at Olympic Dam.
Infrastructure constraints continued to hamper BHP Billiton's metallurgical and energy coal operations in Australia.
Metallurgical coal output was 4% higher than the same period of 2006, but 14% lower from the June quarter because of "planned maintenance and unseasonal wet weather at Queensland Coal".
BHP said third party rail and port constraints continue to impact Queensland Coal's sales, with the infrastructure issues "expected to continue in the near term".
Energy coal production from the US and Australian operations was 19.623 million tonnes, down 4% on 2006, which means the company has been unable to take advantage of the sharp rise in the thermal coal spot market price.
BHP again said third party infrastructure constraints at Newcastle would continue to impact Hunter Valley Coal's export sales.
Petroleum output was flat, with an increase in gas production offsetting a fall in oil, condensate and natural gas liquid output but total production was in line with the previous corresponding quarter at 30.34 million barrels of oil equivalent (mmboe).
Lead and zinc output increased by 25% and 55% respectively, following the completion of the Cannington rehabilitation project in Queensland.
Cannington's rehabilitation also helped silver production which jumped 51% in the quarter, compared to the previous corresponding quarter.
With lead, zinc and silver prices all firmer in the quarter, the higher production should help returns from these operations in BHP's main profit centre, its base metal division.
Aluminium production was flat, while improved recoveries and grades had a positive impact on diamond production, which increased by 110% on the previous corresponding quarter in 2006.
