BHP Forecasts Production Bounce in Year Ahead — Update

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By Rhiannon Hoyle

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BHP Group Ltd. said it expects to increase production of commodities including copper and coal in the year ahead after output last fiscal year was hampered by wet weather and labor constraints.

The world’s biggest mining company by market value on Tuesday also said it is assessing whether a decision by Australia’s Queensland state to raise coal royalty rates will affect economic reserves or mine lives within its metallurgical coal operations.

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BHP reported a recovery in output in its fourth fiscal quarter, with iron-ore output up by 8% on the three months immediately prior, copper production up by 25% and energy coal 52% higher.

Although that enabled BHP to report steady full-year iron-ore output versus its prior fiscal year, annual volumes for its other commodities were weaker following earlier disruptions from heavy rainfall and labor shortages.

BHP is the world’s largest exporter of metallurgical coal, in a joint venture with Mitsubishi Corp., and the third-largest producer of iron ore. It is also one of the world’s top producers of copper and runs the world’s biggest copper mine in Chile.

The miner said it met full-year production goals for its iron ore and energy coal units, as well as recently downgraded guidance for copper and metallurgical coal. Full-year nickel production was lower than revised expectations, however, because of a smelter outage in the fourth quarter.

BHP said group copper-equivalent production for its 2022 fiscal year fell by 4%. However, it forecast a recovery in the year ahead, estimating a roughly 4% bounce in group output in the year through June, 2023.

The miner estimated iron-ore production would be between 249 million and 260 million metric tons this fiscal year, versus 253.2 million tons last fiscal year.

Copper output could climb to between 1.635 million and 1.825 million tons, from 1.574 million tons, it said.

BHP also said metallurgical coal output should be flat or higher, forecasting 29 million to 32 million tons versus 29.1 million in fiscal 2022.

Chief Executive Mike Henry said economic reserves and mine lives in that business were being assessed in light of Queensland’s new royalty regime. Officials in that state last month said they would on July 1 introduce progressive royalty rates following a decadelong freeze.

“The near tripling of top-end royalties has worsened what was already one of the world’s highest coal royalty regimes,” Mr. Henry said.

He also cautioned on continued cost pressures and a worsening global economic outlook.

“Broader market volatility continues and we expect the lag effect of inflationary pressures to continue through the 2023 financial year, along with labor market tightness and supply chain constraints,” he said. While China should contribute positively to growth as stimulus policies take effect, the Ukraine war, the European energy crisis and policy tightening globally should result in slowing global growth, he said.

Mr. Henry said BHP is working to bring forward first production from its Jansen potash project, the only major project the mining company currently has under development. It is also assessing options to accelerate a proposed second phase of that project.

Write to Rhiannon Hoyle at [email protected]



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