Full-year guidance for its iron ore operations was kept at 255 million tonnes to 265.5 million tonnes. — Reuters
MELBOURNE: BHP Group Ltd said iron ore output in its first quarter rose 2% from the year before, as moves by major miners to ramp up production raise the spectre of over-supply.
The world’s largest miner produced 64.6 million tonnes of iron ore over the three months to the end of September, it said in a statement yesterday.
Full-year guidance for its iron ore operations was kept at 255 million tonnes to 265.5 million tonnes.
It comes as China – the biggest consumer of iron ore – attempts to prop up its struggling property sector amid a slump in its economy.
While domestic steel demand is muted, it has been somewhat offset by the local manufacturing industry and exports to other Asian markets.
“China has announced a series of monetary easing policies in an effort to support economic growth, and has indicated more significant fiscal stimulus is on the horizon,” BHP chief executive officer Mike Henry said in company filings.
“Upcoming stimulus is likely to focus on relieving local debt, stabilising the property market and bolstering business confidence,” Henry said.
Over the past year, BHP has focused on streamlining its port operations and ramping-up its South Flank mine, in the Pilbara region of Western Australia, to full production capacity.
It aims to reach 305 million tonnes a year in the medium term, compared with 260 million tonnes of output last fiscal year.
The expansion comes as fellow iron ore majors Rio Tinto Plc and Vale SA boost their own supplies.
Rio, which handed down its production report Wednesday, will bring its Simandou mine online next year.
Meanwhile, Vale churned out 5.5% more ore compared with a year ago and has plans to further raise output.
BHP said production was up across all major commodities in its portfolio, including its copper business, which accounts for about 30% of its annual earnings.
Output of the red metal in the period rose 4% from the year-before.
Its biggest copper mine, Escondida, produced 11% more as mining began in higher-grade areas.
Those gains were offset by a 23% fall from the Pampa Norte project.
Output from its South Australian assets, which it acquired last year through the acquisition of OZ Minerals Ltd, edged higher.Copper is seen by Henry as a core growth area that will increase the company’s exposure to the energy transition, as China’s appetite for steel fades.
Earlier in the year, BHP lobbed a US$49bil takeover offer for copper giant Anglo American Plc, which ultimately failed. — Bloomberg
