BHP Sept qtr iron ore output rises 7 percent, guidance intact
SYDNEY - BHP Billiton boosted September quarter iron ore production by 7 percent to 61 million tonnes, while maintaining full-year guidance at 247 million tonnes and shrugging off growing concerns of a mounting global supply glut.
At its projected production rate, BHP will retain its world number three ranking in output and exports of the steel-making commodity, which accounts for more than half its revenue and profits.
“BHP Billiton remains on track to meet full-year production and cost guidance after a solid operational performance this quarter,” Chief Executive Andrew Mackenzie said in releasing the global mining company’s latest production report.
BHP, like its rivals, is working it mines harder to drive down costs and improve efficiencies as demand for its ore softens in the key China market.
Iron ore prices are down sharply from a high of nearly $200 a tonne in 2011 to $52.10 <.IO62-CNI=SI.> as of Wednesday. The price is forecast to drop to $50 over the next two years, according to a recent Reuters poll
Iron ore miners have been on a drive to lower their iron ore production costs to close to $10-$15 a tonne to keep ahead of the deterioration in pricing.
While global iron ore trade is forecast to increase by only 1.5 percent in 2015 to 1.4 billion tonnes, the lowest rate of growth since 2001, supply from Australia is projected to increase by 6 percent to 762 million tonnes, according to Australia’s Department of Industry and Science.
BHP plans production of 247 million tonnes in the year to June 30, 2016, up 6 percent on a year earlier, ranking it as the third-largest producer worldwide after Vale and Rio Tinto .
Vale this week said it produced a record 88.2 million tonnes of iron ore in the September quarter, just ahead of Rio Tinto, and would also continue to increase output.
In copper, BHP said quarterly production fell 3 percent to 377,000 tonnes as a strong operating performance was offset by the mining of less rich ores at its majority-owned Escondida mine in Chile.
However, its guidance for the 2016 financial year remained unchanged at 1. 5 million tonnes.
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