No sign of BHP Billiton (BHP) pulling back on its iron ore ambitions for the current financial year.
The company indicated earlier in the year it was slowing the final stages of its big expansion plan (and Rio Tinto (RIO) has done much the same), but yesterday it said it was looking for a 7% rise in output for 2015-16 after beating its 2014-15 guidance, and a further rise in 2016-17.
BHP said it would export 250 million tonnes from its Pilbara operations (including the tonnage from its joint venture partners) in 2014-15, but beat that to ship 256 million tonnes in the financial year to June 30.
That will be worth up to $US430 million in extra income for the year from its iron ore operations and those of its partners.
BHP’s share of those exports was 233 million tonnes, which was also higher than the 230 million tonnes forecast (and around $US215 million in extra revenue). The benchmark iron ore price averaged $US71.67 during the year to June 30, 2015, and was at $US52.10 yesterday.
BHP now expects to ship 270 million tonnes (including those owned by joint venture partners) over the next 12 months, and BHP’s share is expected to rise from 233 million tonnes to 247 million tonnes.
BHP’s long term export goal is 290 million tonnes of iron ore a year from its Pilbara operations, including joint venture partners, by June 2017.
BHP 1Y – BHP keeps iron ore output up
In the coming year, only the iron ore division is expected to keep expanding its production and sales. The rest will all mark time or go slightly backwards.
BHP’s copper guidance had already been downgraded in April to 1.7 million tonnes, and the miner achieved the revised target. Copper is forecast to record a 12% slide in production in the current financial year.
Metallurgical coal production grew the most in the 2015 financial year, up 25%, followed by zinc up 2%. However, there was disappointment in other key categories, with aluminium production down 14%, silver down 10% and nickel down 9%.
Output of coking and thermal coal will fall an estimated 6% and 2% in the current financial year (providing there’s no period of bad weather).
Despite the lower oil and gas prices, the division still narrowly beat guidance of 255 million barrels of oil equivalent (boe), with the company delivering 256 million boe.
BHP said its gas production in 2014-15 fell 6% to 787 billion cubic feet, while oil and liquids production jumped 17% to 125 million boe.
Some 56 million boe of the liquids production was from unconventional fields onshore US (shale or tight rock), where output surged by 67%, the company said yesterday.
Output in the June quarter reached 63.2 million boe, 2% down on a year earlier.
BHP’s petroleum business received an average of $US68 a barrel for its oil and condensate sales in 2014-15, down a third from the previous year.
That included a 49% slump in the second half compared to the same period a year earlier.
BHP said that in the coming year conventional petroleum production would fall by about 4% to 125 million boe, because of maintenance work and natural decline as fields mature. Its Stybarrow field offshore in Western Australia finished production on June 30 after reaching the end of its field life.
BHP announced last week that it would wear more than $US2.8 billion of impairments on its US shale division, and yesterday it confirmed up to $US650 million of further impairments on redundancies and certain copper projects (which were announced yesterday).
The demerger of South32 (S32) was completed during the June quarter and BHP said yesterday it will record a net loss on the transaction of $US2.1 billion.
South32 said yesterday it had been informed by BHP that the parent had recognised $US1.9 billion worth of non-cash, pre-tax impairments of South32 assets in early May, with a cumulative $US1.3 billion charge to the value of manganese assets in Australia and South Africa.
This largely offsets a previous $US2.1 billion fair value increase of the assets described in South32’s listing documents in March.
South32 said yesterday it was reviewing the fair value of its assets at June 30, and would “keep the market informed should there be a material difference to those figures provided BHP Billiton” when the company was spun off earlier this year.
In its maiden quarterly operational report yesterday, South32 reported a 1% on-quarter increase in alumina output to 1.3 million tonnes, and a 23% jump in metallurgical coal production to 2.0 million tonnes. Manganese alloy output was down 26%, however, at 81,000 tonnes, while thermal coal production fell 5% to 8.9 million tonnes.
BHP shares eased 2.0% to $26.27.
