Well, BHP Billiton has regained the iron ore bragging rights from its takeover target, Rio Tinto after boosting third-quarter iron ore output 22% to record levels.
The strong result shows that BHP hasn’t been hurt by reported attempts from Chinese buyers to cut back or not take delivery of some iron ore.
In fact it was a result that got the market all excited again, as did another night of strong oil, copper, gold and other commodity prices.
A sharp jump in the production of oil and condensate in the quarter also helped boost enthusiasm for the shares as it came as world oil prices hit a succession of records above $US100 a barrel. They hit a high of $US119.90 on Tuesday in the US.
So BHP shares jumped $1.58, with a sharp rise in afternoon trading, to $45.10. Rio shares also rose, rising $4.88 to $147.19. The 3.4 BHP shares for every Rio share offer were valued at $152.49.
BHP said iron ore output rose to 28 million tonnes in the March 31 quarter, from 23 million tonnes in the March quarter of 2007. Iron ore output rose 13% in the year to date to 81.646 million tonnes.
"Western Australian iron ore operations achieved record quarterly and year-to-date production and shipments during a seasonally challenging quarter," the company told the ASX.
Rio reported a 16% gain in production globally and a 15% rise in Australia in the quarter.
But like Rio, output of coking coal (a key ingredient in steelmaking) fell, dropping 25% because of flooding at the company’s Queensland coal mines held in the joint venture with Mitsubishi. Thermal coal output fell slightly.
BHP said production at the mines had resumed and is being brought up to operational capacity, but according to statements made earlier in the year, the recovery won’t be complete until sometime in the next month.
BHP said that copper also performed poorly, with output falling 8% in the third quarter; while nickel and aluminium output eased in the three months because of the mining of lower quality ore, labour problems and power disruptions in South Africa took their toll.
BHP said copper output at Escondida, the big South American mine co-owned with Rio Tinto, dropped to 328,900 tonnes because of the mining of lower-grade ores. Operations were also hurt by two earthquakes in December, with the impact spilling over into the March quarter.
The Olympic Dam mine in South Australia also produced less because of unplanned interruptions.
The company’s aluminium operations in South Africa were hit by the ongoing power supply crisis; reducing overall metal production by 4% and the Colombian Cerro Matoso nickel operations experienced a drop in output because of a month-long strike that ended in late March. Total nickel output was off 6% in the quarter.
However the bonus was the strong rise in oil and condensate production in the quarter, thanks to rising production from new fields in Australia and the Gulf of Mexico.
Third quarter petroleum production rose 19% to 32.73 million barrels of oil equivalent (mmboe) and total petroleum product output rose 10% to 93.27 mmboe in the nine months ended March from the same period in 2006-07.
"Significant growth in production was mainly driven by the continued ramp up of Stybarrow (Australia), Genghis Khan and Atlantis (both USA) and excellent operated facility performance.
"Production was higher than all comparative periods due to significant growth in high margin crude production. Continued ramp up of new projects and successful development drilling had a very positive impact. Partially offsetting this was the impact of natural field decline, unplanned interruption at North West Shelf (Australia) and the impact of cyclone activities in Western Australia.
"Production was lower than the December 2007 quarter due to expected lower seasonal gas demand in southeast Australia and unplanned interruption at North West Shelf."
BHP said that the first product was delivered from eight projects into commodity markets that remain strong.
"Significant increase in petroleum production with continuing ramp up of recently commissioned projects and strong facility and reservoir performance offsetting natural field decline. On track to deliver 10% volume growth for the 2008 financial year.
"Western Australia iron ore operations (Australia) achieved record quarterly and year to date production and shipments during a seasonally challenging quarter.
"Record year to date manganese ore and alloy production delivered in a strong price environment. Manganese ore also achieved quarterly production record. This was set despite restrictions on power consumption in South Africa.
"Record year to date copper production achieved as newly commissioned projects continue to ramp up in a period of strong pricing.
"The Yabulu Expansion Project (Australia) achieved first production during the quarter.
"Record year to date production of natural gas and alumina.
"Year to date production records achieved at the Worsley, Western Australia Iron Ore, GEMCO, TEMCO, Illawarra Coal, and Hunter Valley Coal (all Australia), Escondida (Chile), Paranam (Suriname), Alumar and Samarco (both Brazil), Samancor (South Africa) and Cerrejon Coal (Colombia) operations.
"Metallurgical coal production in Queensland (Australia) and nickel production at Cerro Matoso (Colombia) has resumed following extreme weather conditions and industrial action respectively. Ramp up to normal operating levels continuing.
"Southern Africa aluminium production was impacted by a mandatory 10% reduction in power consumption." Aluminium production was down 1% in the nine months to 993,000 tonnes, but was up 3% in the March qua
