Apart from iron ore, BHP said its oil production was also stronger in the September quarter, total output up 18% to 41.21 million barrels of oil equivalent (boe) from a year ago and up 10% from the June quarter.
"Production hit an all time high due to the successful delivery of projects in the deepwater of Gulf of Mexico (in the US) and Western Australia over the past two years," the company said in its production review.
"Operational performance was steady and benefited from the absence of weather related interruptions. "This was partly offset by natural field decline," the company said.
Oil prices were steady for much of the quarter and have only kicked higher this month and away from the $US60-US68 range it traded in for much of the three months.
Now they have moved above $US81 a barrel overnight.
The Australian dollar jumped above 93 US cents (and the greenback fell under $US1.50 to the euro).
But as BHP prices and reports in US dollars, the rise in the Australian dollar won’t have an impact on its earnings, not until investors receive their dividends and have to convert.
BHP maintains bank accounts in various countries and currencies to try and match its assets, cashflows and out goings. It doesn’t hedge revenues (it does the cost of plant and machinery etc).
The impact of the weaker US dollar and stronger Aussie dollar would only show up when it reports earnings in Australia from local operations, such as Bass Street, Olympic Dam and the iron ore and coal businesses.
That is six months away at least for the interim report and currency values could be anywhere by then, such is the continuing volatility.
But you’d have to think that the current weakening trends for the greenback (and high value for the Aussie dollar) will continue for some time with the Reserve Bank looking like it will go on lifting rates into 2010 and the outlook for Australia looking better as China continues to grow.
The company reported that crude oil, condensate and natural gas liquids output jumped 30% from the September quarter a year ago and was up 15% quarter-on-quarter to 24.670 million barrels.
Natural gas production was up 4% from a year ago an up 2% quarter-on-quarter to 99.24 billion cubic feet.
BHP is now looking to reverse the recent downturn in copper production over the coming year (and once Olympic Dam is back in full production).
BHP said copper production fell 8% in the quarter, due to maintenance activities at Escondida in Chile and Olympic Dam in South Australia.
"The repairs to Escondida’s Laguna Seca SAG mill were successfully completed in August 2009, however the repairs impacted production in the quarter," the company said.
"Escondida’s production in the 2010 financial year is expected to increase by approximately 5%-10% due to the successful repairs to Laguna Seca mill and higher average grade."
In the past week production at the Spence mine in Chile has slowed, but not stopped and the accident in a shaft at Olympic Dam has cut output sharply until at least next March.
BHP says it has declared force majeure at Olympic Dam on some contracts.
This news and the problems at Spence helped world prices to a 13 month high on Tuesday in the US of just over $US2.93 a pound.
BHP owns 57.5% of Escondida. Rio Tinto owns 30%, Mitsubishi Corp. owns 10% and the International Finance Corp. owns 2.5%.
Output declined 9.7% to 188,400 tonnes in the three months ended September 30, down from 208,600 tonnes a year earlier.
And the company said it expects full output from Olympic Dam copper, uranium and gold mine to resume by the end of next March after the damaged shaft is repaired.
The company said yesterday it will run at around 25% of capacity while the repairs happen. BHP says it had declared force majeure on some supply contracts from the mine.
Yesterday’s production review showed that first-quarter copper cathode output from the mine fell 31% to 37,700 tonnes, while uranium production was little changed at 1,130 tonne. Gold output fell 5% to 26,006 ounces.
In coal the company said that production of metallurgical coal was down 1% from the June quarter, but up 2% from the September quarter of 2008 at 9.404 million tonnes.
Energy (thermal) coal production was flat over the year and up 2% cent quarter-on-quarter to 18.06 million tonnes.
Alumina production was down 5% cent from the June quarter, due to an unplanned calciner outage at Worsley, to 841,000 tonnes and was down 2% cent from a year ago.
Aluminium production was up 1% for the quarter and over the year.
Manganese Ore – Market conditions progressively recovered during the quarter. However, the September 2009 quarterly production was limited due to larger than optimal stockpiles at the start of the quarter. As a result of improved demand and depletion of stockpiles, we expect to be operating near full capacity towards the end of the December 2009 quarter.
Manganese Alloy – As demand conditions improved, stockpiles were drawn down and furnaces were restarted during the September 2009 quarter. We expect to be operating at about 65 percent of capacity towards the end of the December 2009 quarter.
Nickel – Production for the quarter was impacted by a restriction in hydrogen supply at Kwinana Nickel Refinery (Australia) and planned maintenance at Cerro Matoso (Colombia). The September 2008 quarter included the major furnace rebuild at the Kalgoorlie Nickel Smelter (Australia). Output was down 13% at 35,400 tonnes from the June
