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BHP's iron ore guidance hit by March quarter output

BHP has cut its full-year iron ore guidance after production in the March quarter came in well below expectations.
BHP's iron ore guidance hit by March quarter output BHP's iron ore guidance hit by March quarter output BHP's iron ore guidance hit by March quarter output BHP's iron ore guidance hit by March quarter output BHP's iron ore guidance hit by March quarter output

BHP reduced full-year guidance for Olympic Dam due to a slower-than-expected ramp-up

Iron ore shipments for the quarter were 58 million tonnes, up 8% year-on-year, but down by 6% quarter-on-quarter.

UBS had forecast a strong rise in shipments to 68Mt, with BHP even missing RBC Capital Markets' more conservative estimate of 61Mt.

The company said the result was impacted by unplanned car dumper maintenance issues, with work now underway to improve availability.

Production for the nine months to March 31 rose by 2% to a record 175Mt, or 203Mt on a 100% basis.

Full-year guidance has been reduced to 236-238Mt, or 272-274Mt on a 100% basis, down from 239-243Mt and 275-280Mt respectively.

While copper output of 457,000 tonnes was largely in line with forecasts, the company reduced full-year guidance for Olympic Dam by 15,000t to 135,000t due to a slower-than-expected ramp-up after major smelter maintenance late last year.

Group copper guidance was narrowed to 1.7-1.78Mt from 1.65-1.79Mt.

Petroleum production for the nine months to March 31 dropped by 8%, while metallurgical coal and energy coal dropped by 2% and 4%, respectively.

Full-year guidance was left intact for those businesses.

BHP CEO Andrew Mackenzie said the company remained on track to achieve 6% volume growth for the 2018 financial year.

"Strong performance in copper was underpinned by the Los Colorados Extension project at Escondida and higher utilisation rates at Pampa Norte," he said.

"This more than offset the slower than expected ramp-up of Olympic Dam during the quarter following planned smelter maintenance.

"Incremental improvements across our operations from debottlenecking and increased throughput delivered record production in iron ore."

BHP is expecting to receive bids for its US onshore business by June and potentially announce transactions in the second half of 2018.

The company said its major projects were tracking to plan.

Shares in BHP rose by 3.1% to A$31.01 (US$24.18) Thursday morning.

*Kristie Batten is editor of MiningNews.net