Mining giant BHP has reduced its fiscal 2018-2019 (July-June) iron ore production guidance due to the impact of tropical cyclone Veronica, which hit Western Australia earlier in the year, the company said Wednesday.
The company now expects its share of iron ore production from its assets to be between 235 million wet mt and 239 million wmt in fiscal year 2019, and on a 100%-basis, BHP forecasts the assets' total production for the 12 months to be between 265 million wmt and 270 million wmt. Previously, it had set its share of iron ore production guidance for the period at 241 million-250 million wmt and on a 100%-basis at 273 million-283 million wmt.
JP Morgan said in a research note Wednesday said that the impact from the cyclone was greater than expected.
BHP's share of iron ore production stood at 56.12 million wmt in the January-March quarter, which was down 3% both year on year and quarter on quarter, it said in its quarterly results.
RBC Capital Markets analyst Paul Hissey said that RBC had been expecting 63 million wmt for the three months ending March.
"While our facilities did not sustain major damage as a result of the cyclone, the port ramp up was slowed by localized flooding, processing wet material and equipment assessments," BHP said.
On a 100% basis, BHP's Western Australia business produced 64 million mt of iron ore, which was down 5% year on year and 3% quarter on quarter.
The result fell 5 million wmt below J.P. Morgan's forecast of 69 million wmt.
News of the drop in BHP's production guidance comes one day after Rio Tinto lowered its output guidance for 2019 from 338 million-350 million mt to 333 million-343 million mt on a 100% basis.
BHP said that as a result of the issues caused by the cyclone, full year unit costs are now expected to be below $15/mt, which is an increase from the previous guidance of less than $14/mt. This is due to lower volumes, direct costs of remediation, increased demurrage, re-handle to manage stockyards and opportune maintenance at the mines during port downtime.
METALLURGICAL COAL 2019 GUIDANCE UNCHANGED Meanwhile, BHP left its metallurgical coal production guidance -- which comes via its Australian Queensland Coal business -- unchanged for fiscal year 2019 at 43 million-46 million mt via its share of production, while the assets' total production guidance stood at 75 million-81 million mt.
For the January-March quarter, BHP's share of metallurgical coal production was 9.88 million mt, which was down 5% year on year and 4% quarter on quarter, it said.
This fell below both RBC's and JP Morgan's forecast for the period, which stood at 11 million mt and 11.1 million mt, respectively.
The Queensland coal operation comprises the BHP Mitsubishi Alliance and BHP Mitsui Coal assets in the state's Bowen Basin.
Source:Platts |
