BHP remains optimistic about delivering high volumes over the next year despite recording approximately $US1 billion ($1.42 billion) in negative movement in productivity for the 2019 financial year.
The company announced the news this morning in its operational review for the 2019 fourth quarter.
BHP arrived at the $US1 billion figure based on the impact of $US835 million in unplanned production outages in the December 2018 half year, in addition to high costs at its Queensland Coal, New South Wales Energy Coal and Nickel West operations in the June 2019 half year.
Queensland Coal experienced wet weather, lower-than-expected volumes and increased contractor stripping costs, the company said, while NSW Energy Coal also suffered from stripping costs and higher strip ratios. Mine plan changes were cited as a reason for the productivity drop at Nickel West.
The $US1 billion hit did not include the impacts of Tropical Cyclone Veronica on BHP’s Western Australian Iron Ore operations however, which affected BHP’s rail and port operations at Port Hedland in March 2019.
Despite these issues, BHP exceeded full year production guidance for petroleum and met its revised guidance for copper and iron ore, posting an 11 per cent increase in quarterly production across its entire portfolio.
The company’s quarterly iron ore production was up by 12 per cent in the quarter to 63 million tonnes, but production for the full 2019 financial year was 238 million tonnes, broadly in line with the previous year’s results.
Copper production was up six per cent in the quarter but down four per cent year on year to 1.69 million tonnes, while met coal was up 20 per cent on the last quarter but down one per cent year on year to 42 million tonnes.
Thermal coal and nickel were up 10 per cent and 49 per cent in the quarter, but both down by six per cent year on year to 27 million tonnes and 87 million tonnes respectively.
BHP chief executive officer Andrew Mackenzie said that the company was positioned to deliver higher volumes in the 2020 financial year.
“Our overall production was broadly in line with last year, overcoming the impacts of weather, grade and natural field decline, and unplanned outages in the first half,” Mackenzie said.
“Our exploration program delivered encouraging results, with seven out of nine petroleum wells successful and further evaluation of the Oak Dam copper prospect underway.”