BHP Billiton Limited (ADR) (NYSE:BHP) Iron Ore Update
BHP Billiton Wednesday said iron ore production jumped by seven percent in the July-September quarter as it continued ramping up output despite a supply glut in a bid to maintain market share.
The world’s biggest miner reported iron ore output of 61.32 million tonnes compared to the corresponding period last year, with production of the steel-making component at its Jimblebar hub in the Pilbara region of Western Australia jumping.
BHP’s steady rise in ore production has been matched by other leading global miners, including Rio Tinto, which last week said output soared 12 percent in the three months to September.
Global miners have sought to cut costs and boost output as demand from the world’s leading commodities consumer China wanes and prices in key materials dive, placing the bottom lines of smaller competitors that have higher costs under increasing pressure.
Critics, including fellow Australian iron ore producer Fortescue Metals, have claimed the large miners’ push to lift production, which has added to the oversupply, is deliberately done to flood the market and drive competitors out of business.
In contrast to iron ore, BHP’s production levels in other key materials — metallurgical coal and energy coal — remained unchanged, while petroleum and copper output slipped by four and three percent respectively.
“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 a statement.
“In petroleum, we continue to reduce costs in both our onshore US and conventional businesses, and will meet our production targets with US200 million less capital investment,” Mackenzie added.
Petroleum output dropped to 64.5 million barrels of oil equivalent (MMboe) in the July-September period, but BHP flagged an unchanged 2016 financial year guidance of 237 MMboe despite a six percent reduction in capital spending to US2.9 billion.
Natural gas production eased by seven percent as the company deferred developments at its onshore US fields, which was partially offset by higher seasonal demand in Australia amid plunging oil prices.
Shares in BHP were 0.96 percent higher at Aus24.22 in afternoon trade.
“I think it was a solid quarter, so it’s a good start to fiscal year (20)16 for them, with production tracking to guidance across all products,” CLSA’s head of resources research Andrew Driscoll told AFP.
BHP Billiton PLC (BHP), incorporated on May 09, 1996, is an Australia-based mining company having interests in diversified natural resources. The Company mines, extracts and produce aluminium, coal, copper, iron ore, manganese, nickel, silver and uranium, and oil and gas. The Company extracts and process minerals, and oil and gas from its production operations located primarily in Australia, the Americas and Southern Africa. The Company’s assets, operations and interests are separated into five business units, Petroleum and Potash, Copper, Iron ore, Coal and Aluminium, Manganese and Nickel. The Company’s Petroleum and Potash Business comprises conventional and non-conventional operations and a potash project. The Company’s Copper business produces copper and related ores and minerals. The Company’s Iron ore business produces iron ore. The Company’s coal business produces multiple variants of coal. The Company’s Aluminium, Manganese and Nickel business is a producer of aluminium, manganese and nickel.
Petroleum and Potash
The Petroleum and Potash business includes exploration, development, production and marketing activities. The business has a resource base concentrated in the United States and Australia. The business’ core production operations are located in the US Gulf of Mexico, onshore US and in Australia. The business also has operations in Trinidad and Tobago, Pakistan, Algeria and the United Kingdom. The business produces crude oil and condensate, natural gas and natural gas liquids (NGLs). The business’ petroleum portfolio consisted of conventional oil and gas operations, as well as, unconventional shale business. The business’ total petroleum production during 2014 was 246 million barrels of oil equivalent (MMboe). The Petroleum and Potash business contributed 21.9% to the Company’s total revenues.
Copper
The Copper business produces copper, silver, lead, uranium and zinc. The business also markets copper, copper cathodes, lead and zinc concentrates and uranium oxide. The Company’s copper assets are largely located in Chile, while Australia and Peru also contributes significantly. The business’ total copper production during 2014 was 1,727 kilo tons. The Copper business contributed 20.5% to the Company’s total revenues.
Iron Ore
The Company’s Iron ore business produces iron ore. The business sells lump and fines products and pellets. The Company’s iron ore mines are located in Australia and Brazil. The business’ total iron ore production during 2014 was 204 metric tons. The Iron ore business contributed 31.6% to the Company’s total revenues.
Coal
The Coal business is a supplier of seaborne metallurgical coal and domestic energy coal in the countries where its mines are located. The Company’s coal assets are located in Australia, South Africa and the United States. The business produced 45 metric tons of metallurgical coal and 73 metric tons of domestic energy coal during 2014. The Coal business contributed 13.5% to the Company’s total revenues.
Aluminium, Manganese and Nickel
The Aluminium, Manganese and Nickel business is an integrated producer of aluminium, nickel and manganese ore and alloy. The segment’s assets are located in Australia, South Africa, Mozambique, Brazil and Colombia. The Company produced 5,178 kilo tons of alumina, 1,174 kilo tons of aluminium, 8,302 kilo tons of manganese ore, 646 kilo tons of manganese alloys and 143 kilo tons nickel during 2014. The Aluminium, Manganese and Nickel business contributed 12.4% to the Company’s total revenues.
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