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Closures, adverse weather cut into BHP production

Several Australian industries, including mining, could benefit from big data analysis. Photo: BHP Billiton

BHP Billiton has announced declining volumes across all five of its major commodities, citing unfavourable weather and several closures as major causes of disruption.

The ASX-listed mega-miner, which spun-off the majority of its non-core businesses last year into new venture South32, announced declines in the five commodities which make up its four ‘pillars’ of core business in its third quarter announcement last week.

Year-to-date figures for petroleum, copper, iron ore, and coal (energy and metallurgical) were all down in the operational update.

Iron ore production has been impacted by the closure of the BHP/Vale joint venture Samarco mine in Brazil, after several workers died when at least one tailings dam failed there late last year.

This has been partially offset by record production from BHP’s West Australian iron ore business.

The miner produced 171mt of iron ore in the first three quarters, down 1% year-on-year.

BHP’s copper division saw increased production from the Escondida mine in Chile, offset by lower grades, resulting in 1.2mt of production through the first three quarters, down 8%.

Metallurgical coal production was down 1% year-to-date, with 31mt produced to the end of March. Record production at six Queensland coal mines was offset by the planned closure of the Crinum coal mine, north-east of Emerald in Queensland.

Year-to-date energy coal production was 27mt, down 10% year-on-year at the end of the March quarter, with BHP citing unfavourable weather conditions impacting both its NSW mine and export operations, and its operations in Colombia.

Chief executive Andrew Mackenzie focused on the positive in the ASX release.

“The productivity of our company continues to improve notwithstanding the disruption largely caused by adverse weather this quarter,” Mackenzie said.

“Over the last 12 months, we have taken a number of steps to strengthen BHP Billiton, including asset sales and the deferral of investment for long-term value.”

Mackenzie said that while these measures would take a toll on output this financial year, they will increase the miner’s focus on its highest quality operations in the long run.

“We have the potential to significantly grow the value of our company,” he continued.

“Our simpler organisational structure will promote greater efficiency, rapid sharing of best practice and adoption of new technology to deliver the next level of safe productivity.”

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