Cautious BHP flags soft year ahead in iron ore Peter Ker
Jul 19, 2022 – 9.06am
Production volumes at BHP’s flagship Australian iron ore and coking coal divisions will be soft in the 12 months ahead after a challenging year where pandemic and weather disruptions ensured there was virtually no volume growth at any Australian operations.
BHP told investors it would sell between 278 million and 290 million tonnes of iron ore this year, with the midpoint suggesting the company was likely to effectively match the export volumes achieved in the past three years.
BHP shipped 283.94 million tonnes over the past 12 months; that tally was virtually unchanged from the 283.87 million tonnes in the year to June 2021 and the 283.25 million tonnes shipped the previous year.
Analyst consensus measured by Visible Alpha had expected BHP to be shipping 292 million tonnes in the year ahead, with UBS expecting BHP to sell between 285 million and 295 million tonnes while Barrenjoey had forecast 288 million tonnes for the 2023 financial year.
BHP’s Queensland coal division will ship between 58 million and 64 million tonnes in the year ahead.
Investors are more accustomed to BHP shipping more than 70 million tonnes a year from the Queensland coalfields, but the lower total partially reflects the divestment of mines including Poitrel and South Walker Creek.
South Australia’s Olympic Dam copper and uranium mine should be the exception, with BHP suggesting it will produce close to 200,000 tonnes of copper, which is effectively its maximum capacity.
The cautious guidance comes as another wave of COVID-19 infections sweeps Australia and as prices for BHP’s commodities slump on very weak demand and fears of a global recession.
Chief executive Mike Henry said he expected global growth to slow in the year ahead, although he said BHP’s major customer, China, should continue to grow.
Mr Henry said inflationary pressures were expected to persist in the year ahead.
BHP shipped 72.79 million tonnes of iron ore from Western Australia over the past three months, in line with the 72.8 million expected by Barrenjoey and the 73 million expected by UBS.
Tuesday’s market update rounds out a difficult operating year for all miners and BHP was not immune from the labour shortages and other pandemic pressures, downgrading volume targets for coking coal, copper and nickel over the course of the year.
The benchmark iron ore price was reported by Platts at $US100.90 per tonne on July 18.
Top quality hard coking coal from Queensland was measured by Platts at $US230 per tonne on the same day.
