BHP Iron Ore Output Up 16%

Industry News 2010-07-28 13:25:15

Source : The Wall street Journal

Date : 20th July, 2010
SYDNEY - BHP Billiton Ltd on Wednesday reported a strong performance in its fourth quarter ended June 30, with production of iron ore and metallurgical coal both up 16% on a year before.
The world's biggest miner produced 31.2 million metric tons of iron ore in the fourth quarter of its reporting year and 125.0 million tons over the year, it said in its year-end production report.
Iron ore accounted for around a third of BHP's earnings in the previous financial year, followed by petroleum and metallurgical coal.
Against a backdrop of record prices for the commodity, BHP's iron ore production was flat against the third quarter, a result that was "a little bit lighter than it could have been," said O'Connor.
BHP followed its smaller rival Rio Tinto Ltd. in sounding a cautious outlook for the global economy.
"Uncertainty surrounds the near-term prospects for growth in the developed world" due to the end of fiscal stimulus programs and increase in sovereign debt, the company said.
"Within China, measures introduced to reduce growth to more sustainable levels mean volatility in commodity end-demand is likely to persist."
The latest report largely met broker expectations. "It's very much in line," said Peter O'Connor, a resources analyst at Bank of America-Merrill Lynch. "Some of the readings are a bit over."
The only disappointments, O'Connor said, were the lack of detailed guidance on the implications of a drilling moratorium in the Gulf of Mexico and the failure to lift iron ore production in the June quarter.
The company reported its third consecutive annual production record for petroleum despite the problems in the Gulf of Mexico.
The U.S. government imposed a moratorium on deepwater drilling in the Gulf following the oil spill at BP PLC's Macondo well in April, and revised the ban last week after the original moratorium was overturned by a federal appeals court.
The company said it "continues to monitor and assess the impact" of the six-month suspension of permitting and drilling activities in the Gulf.
Overall, crude oil, condensate and natural gas liquids output gained 18% on year to 25.7 million barrels in the quarter while natural gas output fell 6% to 91.0 billion cubic feet.
The company also reported success in moving metallurgical coal contracts to a shorter-term basis.
Coal used in steelmaking has traditionally been priced based on an annual benchmark derived from the first major producer-consumer contract price.
BHP, the world's largest supplier of seaborne hard coking coal, has been pushing to move that to a quarterly system based on spot prices, in line with a concurrent shift in iron ore pricing.
The majority of product sold in the past three months was on a shorter-term basis, BHP said, as was 34% of the total sold during the reporting year.
Production was up 3% for the year at 37.4 million tons, and up 16% on year in the fourth quarter at 11.0 million tons.
For iron ore, 39% of shipments from Western Australia were still based on annual benchmarks, the company said.
Energy coal was also flat versus the previous quarter, and fell 8% on year, to 16.3 million tons. Production totaled 66.1 million tons for the year.
Base metals production was mixed, with strong performances at mines in Chile and the return of full production at Australia's Olympic Dam mine, affected since late 2009 by mine shaft problems.
Copper production fell 5% on the year to 291,100 tons in the fourth quarter, while lead production grew 7% to 62,900 tons, and zinc rose 3% to 45,400 tons.
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