BHP (ASX:BHP) CEO Mike Henry says the mining giant remains on track to meet copper, iron ore and energy coal production for the year. Henry highlights that copper volumes have increased 10%, “reflecting strong performance and additional tonnes coming from Copper South Australia, a record year-on-year performance from Spence and improved grades and production at Escondida.” Commenting on BHP’s operational review for the nine months ended March 31, 2024, Junvum Kim, Senior Sales Trader at Saxo Asia-Pacific, says the results appear to be mainly from South America.
Increase in copper and iron ore production
“BHP’s copper production increase of 15% appears to be a highlight driven by its Escondida mine (in Chile) in response to the recent rebound in copper prices, while Western Australia’s iron ore production achieved grow marginally year-on-year despite a sharp drop in ore prices in the first quarter, not to mention the sharp rebound in the iron ore price this month,” says Kim.
Henry adds that Western Australia Iron Ore, the world’s lowest-cost iron ore producer, has delivered another consistent period of production despite heavy rain. “We continue to invest in improvements to our rail and port operations, which are essential for medium-term growth of 305 million tonnes per year and beyond,” he says.
Challenges in the production of metallurgical coal
Significant rainfall and operational challenges at BMA’s metallurgical coal operations in Queensland impacted production and unit costs, and guidance for the year has been revised. Additionally, the sale of the Blackwater and Daunia mines was successfully completed on April 2 for a total of up to US$4.1 billion.
Progress on projects in Canada and Australia
In Canada, the Jansen stage one project is ahead of its initial schedule and is 44% complete. In Western Australia, a decision on the future of our nickel business is expected to be announced in the coming months, where efforts are being made to optimize operations and preserve value,” adds Henry.
Increase in copper production in Escondida
BHP reports that the increase in copper production was primarily driven by record production at Spence, strong operating performance at Copper South Australia (and contribution from Prominent Hill and Carrapateena) and improved yield and grade at Escondida.
BMA’s fiscal 2024 production guidance has been reduced to 21.5-22.5Mt (43-45Mt at 100%). Updates to fiscal 2024 production guidance are reflected in the table below. BMA’s FY2024 unit cost guidance has increased to US$119/t – US$125/t.
At Escondida, the increase in production is primarily due to a higher grade fed to the concentrator of 0.85%, compared to 0.79% previously, as mining progressed into high-grade ore areas as planned, following the implementation of measures to manage geotechnical events. The concentrator feed grade for fiscal 2024 is expected to be between 0.85% and 0.90%, achieving a grade of 0.92% in the third quarter of fiscal 2024.
