A quarterly report from BHP Billiton has lowered the mining giant’s production targets for copper and coking coal because of strikes and weather events in recent months.
Record production at five of BHP’s Queensland coal mines has so far driven a 2% increase in the miner’s coking (i.e. metallurgical) coal production through the first nine months of FY17.
But operational and infrastructure setbacks due to Cyclone Debbie, which hit the region at the end of the third quarter, have forced BHP to lower its coking coal guidance to 39-41 million tonnes for the full financial year.
The new guidance is down from 44 million tonnes.
BHP said damage to both its mines, and to network infrastructure owned by track provider Aurizon, would limit FY17 production.
This was only partially offset by the record production at certain mines, which it said was “underpinned by improved stripping and mining performance, higher yields at Caval Ridge and Saraji, and increased wash-plant utilisation”.
Energy coal guidance remains the same, at 30 million tonnes for FY17.
Iron ore guidance was narrowed from a previous guidance of 228-237 million tonnes, to a new guidance of 231-234 million tonnes.
And petroleum guidance stayed stable at 200-210 million barrels of oil equivalents.
But over a month of strike action at BHP’s massive Escondida copper mine in Chile, lowered guidance for that commodity from 1.62 million tonnes to 1.33-1.36 million tonnes for the full FY17.
Production at Escondida was down 44% in the March quarter, resulting in a 23% financial-year-to-date drop.
This was caused by 44 days of industrial action at the mine.
Chief executive officer Andrew Mackenzie, who recently fought off a major investor’s suggestion to sell off US petroleum assets, emphasised the miner’s efforts to “create value for all of our shareholders, today and for the long term,” in his quarterly message.
“We have fundamentally restructured BHP Billiton to increase returns,” he said.
“The demerger of South32 and US$7 billion of divestments has reduced the number of assets in the portfolio by over a third and our new organisational structure has removed layers of management.”
Mackenzie said the company’s “more focused” approach had led to a 40% reduction in unit costs, and a strengthened balance sheet.