BHP sees drop in metals year on year

BHP has seen a drop in production for all of its metals apart from alumina and iron ore.

In its production report for the nine months ending 31 March, BHP saw slump in its base metals production, however compared to the December quarter the March quarter has seen some upswing.

It is predicting dire consequences ahead for its coal division.

Year on year BHP saw a 10% drop in copper production despite production increasing from its Escondida mine by about 9% due to higher grades.

However due to poor weather and recoveries from its Pampa Norta mine as well as planned maintenance at Olympic Dam overall production slowed.

Production levels are planned to improve as mining at Escondida "progress towards higher grade ores with completion of the Escondida Ore Access project in the main pit," BHP said.

For lead it saw only a 5% fall in production, due to lower average ore grades and mill throughput at Cannington.

BHP saw a huge drop in zinc production, plummeting 31% for the year to date compared to 2011, and a 26% fall year on year.

It has begun seeing growth in production though, with the March quarter recording 5% more tonnage compared to the December quarter.

The miner stated this rise was due to an improvement in its Antamina mine ore grades.

BHP anticipated a slump in diamonds, stating that EKATI production is expected to remain constrained in the medium term as the mine hits lower grade materials.

A 29% year to date drop was recorded.

A review of its diamonds business began in December last year.

Gold also saw a 15% drop in production.

Despite these losses, BHP recorded a spike in its iron ore production, which is likely to continue growing.

For the year to date 2012, it saw a 20% increase thanks to record production in Western Australia.

The ramp up of its ore handling plant 3 at Yandi, dual tracking of rail infrastructure and additional ship loading capacity at Port Hedland via its Outer Harbour plan will see production dramatically increase as the year continues.

Manganese ore also saw a jump, with production rising 11% after its GEMCO mine recovered from poor weather.

Surprisingly BHP did not see a massive spike in its coal production.

Its metallurgical coal division saw a 1% increase in the year to date production, although compared to the 2011 March quarter it saw a 10% increase.

However compared to the previous quarter production for March actually dropped 14%.

BHP blamed industrial action and heavy rainfall for the drop, adding "the extent to which industrial action will continue to affect production, sales and unit costs is difficult to predict however with inventories now severely depleted the impact on future quarters may be significant.

"Force majeure was declared across all BMA sites in April 2012 and remains in place.

Earlier this month BMA announced the closure of its underperforming Norwich Park coal mine.

Its thermal coal division saw an increase of 3% in the year to date production levels compared to 2011, and a 2% jump quarter on quarter.

However BHP says its export volumes were affected by ship delays from Newcastle.

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