BHP Achieves Annual Guidance for Output of Most Commodities
21 July 2020 - 9:24AM
Dow Jones News
By David Winning
SYDNEY--BHP Group Ltd. said it achieved annual production
guidance for most of its major commodities despite disruption
caused by the coronavirus pandemic.
BHP said it produced 67 million metric tons of iron ore in the
three months through June, up 11% on the previous quarter. That
brought annual production to 248 million tons, which is 4% higher
than in the 2019 fiscal year.
Like rival Rio Tinto PLC, BHP's iron-ore business has benefited
from supply disruptions in Brazil where some mining hubs were
forced to shutter temporarily to contain the spread of the novel
coronavirus. In addition, miners have recently got a tailwind from
a rapid economic recovery in China, where nearly 90% of steel is
used domestically.
On Tuesday, BHP said Chinese domestic industrial activity has
been improving, as authorities loosened access to credit and
introduced fiscal stimulus. Still, management said the potential
for a second wave of virus infections in China is a key risk.
BHP said its production of metallurgical coal, also used to make
steel, rose by 26% in the June quarter to 12 million tons. However,
annual output of metallurgical coal fell by 3% to 41 million
tons.
Quarterly copper production fell by 3% to 414,000 tons compared
with the March quarter, although full-year production was up 2% at
1.7 million tons. BHP said copper volumes are expected to be
slightly lower in the 2021 fiscal year, partly due to the impact of
a headcount reduction at mine sites in response to the
pandemic.
"Our diversified portfolio and high quality assets, together
with our strong balance sheet, make us resilient to the ongoing
uncertainty in the markets for our commodities," said Chief
Executive Mike Henry. "We expect to continue to generate solid cash
flow through the cycle and we remain confident in the outlook for
demand for our products over the medium to long-term."
BHP said it expected to achieve full-year unit cost in its
Australian iron-ore business, the Queensland Coal division, and its
energy-coal business in New South Wales state. However, unit costs
in petroleum and at the Escondida copper mine in Chile are expected
to be slightly above guidance.
The miner outlined two new exceptional items that it expects to
record in its results for the 2020 fiscal year. BHP said it would
book an impairment charge of US$450 million-US$500 million tied to
property, plant and equipment at Cerro Colorado. It also said costs
directly tied to the pandemic would be recorded as a US$100
million-U$150 million exceptional item.
Write to David Winning at david.winning@wsj.com
(END) Dow Jones Newswires
July 20, 2020 19:09 ET (23:09 GMT)
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