BHP shares leapt more than 2.8% yesterday despite the company trimming its iron ore production forecasts for 2017-18 by around 2 million tonnes due to unplanned maintenance and disruption from a cyclone early in the three months to March.
The shares ended at $30.92, a six week high as investors looked at rising nickel, oil and aluminium prices and shouted boom.
The company said in its March quarter and 9 month production and sales report yesterday that full year iron ore production guidance has been cut to between 272 and 274 million tonnes, compared to the previous forecast of 239 to 243 million tonnes.
Total iron ore production for the nine months to March increased by 2% to a record 175 million tonnes.
However, record production at Jimblebar and Mining Area C was partially offset by the impact from Cyclone Joyce in January and unplanned car dumper maintenance.
Third-quarter iron ore production was 57.7 million tonnes – up 8% on the prior corresponding period, but it was down 6% from the three months to December because of the unreliable dumper cars needing maintenance to improve availability and performance.
That remedial work on the dumper cars should help the company increase annual production at its Port Hedland operations to the 290 million tonnes for which it already has regulatory approval.
Iron ore prices though came off the boil at the end of March and into this month and are down more than $US13 a tonne or around 20% from peaks in January and March.
BHP said that full year production guidance is unchanged for its Petroleum, Metallurgical Coal (which will be down on 2016-17) and Energy Coal.
“BHP remains on track to achieve 6% volume growth for the 2018 financial year,” said BHP Chief Executive Officer Andrew Mackenzie in the statement.
“Strong performance in copper was underpinned by the Los Colorados Extension project at Escondida and higher utilisation rates at Pampa Norte.
“This more than offset the slower than expected ramp-up of Olympic Dam during the quarter following planned smelter maintenance.”
Meanwhile BHP now has a three track process for quitting its disastrous onshore shale gas business in the US.
In the 9 month production and sales report yesterday it said that exit plan for the onshore US assets remains on track.
“… data rooms for all fields and mid-stream assets are now open. We expect to receive bids by June 2018 and proceed with negotiations to potentially announce one or several transactions in the first half of the 2019 financial year. In parallel, we continue to explore potential asset swap opportunities and exit via demerger or Initial Public Offering.”
BHP said it dropped the number of gas rigs working on these areas in the quarter and onshore US drilling and development expenditure for the nine months ended March 2018 was $US648 million.
"Our operated rig count declined from nine to seven during the March 2018 quarter,” BHP said.
