BHP iron ore production forecast hit by weather

Image: BHP Billiton

BHP has cut its iron ore production guidance for the 2019 financial year on the impacts of Tropical Cyclone Veronica, after a similar reduction by Rio Tinto yesterday.

The production forecast reflects a six to eight million tonnes drop to 265-270 million tonnes.

BHP’s facilities did not sustain major damage as a result of the cyclone, but its port ramp up was slowed by localised flooding, the processing of wet material and equipment assessment, according to the company.

The weather impact also pushed up BHP’s iron ore unit costs to below US$15 ($21) per tonne from previous guidance of less than $US14 ($20) per tonne.

“During the March 2019 quarter, we had a strong operational performance despite weather impacts across Australia and Chile,” chief executive Andrew Mackenzie said.

“We approved Atlantis phase three and now have five major projects under development. Those projects, our work on transformation, technology and culture, and our successful petroleum and copper exploration and appraisal programs will grow value and returns for years to come.”

BHP started streamlining its global back office functions 12 months ago to remove “duplication, bureaucracy and hierarchy” as way to reduce costs and cycle times.

The world’s biggest miner’s five major development – spanning petroleum, copper, iron ore and potash – have a combined budget of $US1.1 billion over the life of the projects. The company did not change its production forecast for petroleum, copper, metallurgical coal and energy coal.

BHP runs four iron ore processing hubs and five mines connected by over 1000 kilometres of rail infrastructure and port facilities across the Pilbara, Western Australia.

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