Mining and Heavy Industries

Samarco cuts into BHP result

Bento Rodrigues after Samarco disaster Photo Anonio Cruz Agencia Brasil Creative Commons

The continued shutdown of BHP’s joint venture Samarco mine in Brazil has resulted in a 2% decline in the miner’s iron ore production in the 2015/16 financial year.

Samarco was closed after a tailings dam collapsed, flooding a small village below, resulting in 19 deaths.

The project was a joint venture between BHP Billiton and Brazilian mining giant Vale.

The loss of Samarco’s production from BHP’s figures was partially offset by a 2% increase in WA iron ore production, but not enough to put it in the growth column.

Overall, BHP produced 227mt of iron ore in 2015/16, down 2%. In the June quarter the miner produced 56mt, down 7%.

Iron ore wasn’t the only business sector the ASX-listed giant saw a production decrease.

The deferral of development activity in its onshore US business resulted in a 6% drop in petroleum production for the mega miner, to 240 million barrels of oil or equivalent.

Lower grades of ore at the Escondida mine resulted in an 8% decline in copper production to 1.58mt.

And divestment of the San Juan Mine, along with unfavourable weather in NSW and elsewhere resulted in a 16% drop in energy coal production to 34mt.

Metallurgical coal was BHP’s only major area of growth, with record production at five Queensland coal mines resulting in a 1% year-on-year rise, to 43mt.

BHP boss Andrew Mackenzie said he expected volumes and costs to improve over the next 12 months as a result of the company’s continued rive to safely boost productivity.

“We can create significant value through further cost reductions, taking advantage of latent capacity in our assets and investing in low-capital projects,” he said.

“These initiatives are expected to grow production by 5% in copper, up to 4% in iron ore, and 3% in metallurgical coal in the next financial year.”

 

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