BHP Billiton has upgraded its iron ore production guidance for the fiscal year from 207 to 212 million tonnes after beating forecasts during the September quarter.
The world’s largest miner produced 54 million tonnes of iron ore out of its Western Australian Pilbara operations during the three months to the end of September.
BHP’s ownership share is 49 million tonnes and the figure is a 23 per cent jump on the prior corresponding period.
Copper and uranium production at Olympic Dam has been hampered by smelter reliability issues, the company’s quarterly production report said.
“Olympic Dam copper production was affected by smelter reliability issues during the September 2013 quarter,” it said.
“A maintenance outage scheduled for the March 2014 quarter will address smelter performance.
“Copper production at Olympic Dam for the 2014 financial year is expected to be in line with the prior year.
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“Uranium – Uranium production decreased by 12 per cent from the June 2013 quarter as a result of lower average uranium ore grades and planned maintenance at Olympic Dam.”
Total petroleum production for the September quarter was a record 62.7 million barrels of oil equivalent.
That was a two per cent lift and driven by its US onshore shale volumes.
BHP’s Pilbara operations shipped 54 million tonnes during a period of strong iron ore prices that averaged about $US130 a tonne during the three months. BHP’s share was 49 million tonnes.
The figures beat analyst forecasts for about 50 million tonnes in sales.
The petroleum figures were two per cent above the prior corresponding period.
The group’s US onshore shale oil operations grew production by 29 per cent in the previous quarter.
Petroleum is currently the company’s second-biggest earner but tipped to overtake iron ore in the next few years.
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BHP continues to ramp up production out of its US onshore shale oil and gas operations that it spent $US20 billion investing in in 2011 before writing down their value by nearly $US3 billion amid strong criticism.
Elsewhere, copper production was six per cent higher on a year ago at 403,000 tonnes, metallurgical coal 14 per cent up at 10.2 million tonnes and energy coal 3.0 per cent better at 19.6 million tonnes.
BHP chief executive Andrew Mackenzie linked the increase in iron ore guidance to pursuing productivity gains, including mobile crushing units and streamlining the supply chain.
The company had collected $US2.2 billion ($A2.28 billion) during the quarter in proceeds from the sale of a stake in its Jimblebar iron ore project to Japanese partners and the offloading of the US Pinto Valley copper mine.
McKenzie repeated the cost cutting message other large miners have voiced, saying he would build on a $US2.7 billion reduction in cash costs last year and 25 per cent drop in capital and exploration expenditure to $US16 billion.
“Our rate of expenditure will decline again next year and if our investment criteria cannot be met in any one project, product or geography, we will redirect our capital elsewhere or we will not invest,” he said.
Invast chief market analyst Peter Esho said BHP and other large mining companies had learnt lessons from the recent downturn and their cost cutting and focus on ramping up volumes was so far progressing well.
“It’s good enough to offset any weakness in commodity prices,” he said.
“With energy prices solid and production volume ramping, BHP’s board now seems justified in its tilt to increase energy exposure.”
While some metals divisions, such as copper, had disappointed they were not significant earners and the company had time to wait for a price lift.
