As expected, BHP Billiton, had a very good second quarter and first half (to the end of December) in its various mines and commodities.
Led by another record for iron ore, BHP said half-year production records were also set for petroleum, nickel and zinc.
It was a performance (especially in iron ore) that analysts had anticipated, especially after Rio Tinto’s strong December quarter showing in last week’s production report.
BHP said there had been strong price recovery "across the commodity suite", driven by demand from China and restocking in the developed world.
Looking ahead, the company said the speed of recovery in developed economies remained uncertain, especially given withdrawal of government stimulus, while China’s moves to control loan growth could have an effect on demand.
"Consequently, we expect some degree of volatility in the short term outlook for commodities," BHP said.
BHP said that iron ore production jumped 11% to 32.449 million tonnes for the three months to December from a year earlier
That took production for the half year to 62.6 million tonnes, which was also a record.
The company said spot or non-contract sales accounted for some 46% of iron ore sales, up from 30% at the end of June last year. World iron ore prices have almost doubled from the $US61 a tonne contract average price struck with Japanese mills for the April, 2009-March 2010 year.
Talks are underway with those mills which could see those gains turned into higher contract prices, which would eliminate the price cuts for the current year.
It means BHP (and Rio Tinto) could be looking at substantial profit increases for the 2010-2011 financial year.
BHP shares ended up 10 cents at $43.41 yesterday as the market fell away in the afternoon on the news of China’s apparent crack down on bank lending.
Rio Tinto last week reported a 49% jump in fourth quarter global iron ore production compared with the corresponding period of 2008.
Global iron ore sales set a new quarterly record of 61 million tonnes (100% basis).
Global iron ore production in 2009 exceeded 217 million tonnes (172 million tonnes on an attributable basis), up 13% on 2008.
BHP Billiton also revealed yesterday that it had approved $US240 million ($261 million) to fund the development of the first stages of its Jansen Potash Project in Saskatchewan, Canada.
The project is being designed to yield around 8 million tonnes of agricultural-grade potash per year, the company said.
That was the second investment of this size approved this week.
On January 18 BHP announced US$267 million (BHP Billiton share) of pre-approval capital spending to accelerate the development of the Caval Ridge and Hay Point Coal Terminal Stage 3 Expansion projects in Queensland.
On January 5 it revealed the go-ahead for the Antamina Expansion project (base metals) in Peru.
It also revealed it had spent well over $400 million on mineral and petroleum exploration in the December half year.
BHP also revealed that it had boosted its total forecast petroleum exploration expenditure for 2010 financial year by a third (or $US200 million) to $US800 million because of increased drilling activity.
The group said petroleum production also jumped to another half-year production record.
Production rose 16% to 38.36 million barrels of oil equivalent (boe) in the fourth quarter from a year earlier, taking the half year performance up 17% to 79.57 million boe.
Petroleum production had jumped to a record high due to the ramp up of BHP’s Shenzi field and a strong performance from Atlantis, both of which are in the Gulf of Mexico.
There were no weather-related interruptions to production.
Production declined slightly from the September quarter as a result of lower seasonal demand in eastern Australia and planned downtime at Gulf of Mexico non-operational assets.
In its iron ore operations, the rapid growth project 4 (called RGP4) ramp up was continuing in the Pilbara region of Western Australia, and the miner expected to reach full capacity by the end of next year.
RGP4 already had helped achieve better use of rail and port infrastructure, which had helped in the record half-year production.
Nickel production in the December fourth quarter jumped 20% to a record 49,000 tonnes on the back of the improved performance of BHP’s Australian Nickel West operations.
BHP produced 84,400 tonnes in the December half year, up 45% from the prior corresponding half.
Zinc production surged 58% in the fourth quarter to 59,835 tonnes due to higher mining grades.
Production jumped 33% to 106,260 half on half.
Copper production slipped 10% to 555,000 tonnes for the half year, mainly due to the Shaft outage at Olympic Dam in South Australia, as well as industrial action in Spence in Chile.
These were offset partly by stronger production at Escondida, also in Chile.
Alumina production rose 1% to 1.78 million tonnes and aluminium had the same percentage gain to 626,000 tonnes, half on half.
Lead production was flat half on half at 106,260 tonnes, silver production rose 3% to 22,458 ounces, but uranium production slipped 25% to 1,478 tonnes, thanks to the problems at Olympic Dam.
Diamond output rose 13% to 1.54 million carats, half on half.
Coal production fell, with metallurgical coal falling 5% to 18.3 million t
