BHP has not lowered its full-year guidance for iron ore and coal despite the quarterly results, and noted 'encouraging exploration' from its Oak Dam copper project
Coal and iron ore production at BHP fell in the three months to September, although the extractive giant has not adjusted its full-year forecast for the commodities.
In a trading update, the miner also confirmed that plans for a $17bn potash project in Canada — one of the firms’s most significant investments in recent years — would not be decided upon until 2021.
In the meantime, around $345m will be spent on additional preparations.
BHP CEO Andrew Mackenzie said: “We delivered a solid start to the 2020 financial year through ongoing strong operational performance across our portfolio.
“While group production for the quarter decreased slightly due to the expected impacts of planned maintenance and natural field decline in petroleum, guidance remains unchanged and we are on track to deliver slightly higher volumes than last financial year.
“The South Flank iron ore project is 50% complete, with all our major projects on schedule and budget.
“We achieved further encouraging exploration results in petroleum and at the Oak Dam copper prospect.”
BHP coal and iron ore production down in the three months to September
Metallurgical coal production dropped by 10% year-on-year to nine million tonnes in the first quarter of its financial year, with the Anglo-Australian miner citing “planned major wash plant shutdowns” in Queensland, Australia as the key factor.
A “change in product strategy to focus on higher quality goods” in New South Wales accounted for a 15% year-on-year decrease in energy coal production to six million tonnes.
BHP maintained its full-year guidance for both forms of coal at between 41 million and 45 million tonnes, and between 24 million and 26 million tonnes respectively.
Iron ore production of 61 million tonnes was down 3% compared with the previous quarter, with guidance unchanged for the year at between 242 million and 253 million tonnes.
BHP said lower volumes at its Western Australia Iron Ore unit reflected “significant planned maintenance at Port Hedland” including major car dumper maintenance.
It also confirmed the divestment of its 45.5% interest in the Nimba iron ore project in Guinea in 2019.
Jansen potash project decision due in 2021
BHP also confirmed a final decision on the future of the planned Jansen potash project in Canada would be made in February 2021.
The venture has an overall expected cost of around $17bn, with executives to make their initial vote on $5bn for the Stage 1 facility after further planning and risk assessment.
BHP said: “In order to make a final investment decision, work on engineering to support project planning and on finalising the port solution is required, and the board has approved $144m for these activities.
“An additional $201m in funding was approved to further de-risk the project, focusing on the mine’s scope of work, advancing other engineering and procurement activities, and preparation works for underground infrastructure.”