BHP Reports Iron Ore Output Little Changed, Meets Estimates

BHP Billiton Ltd. (BHP), the world’s largest mining company, reported first-quarter iron ore production was little changed, in line with analyst estimates.

Output was 39.77 million metric tons in the three months ended Sept. 30, compared with 39.57 million tons a year earlier, Melbourne-based BHP said today in a statement. The median estimate of three analysts surveyed by Bloomberg was 39.2 million tons.

BHP, with $22.8 billion of projects in execution, said in August that it would continue spending on iron ore expansion projects already approved while it won’t go ahead with other large projects in the near-term after revenue declined as commodity prices fell. Ventures on hold include the Olympic Dam copper-gold expansion development in South Australia, which is estimated by Credit Suisse AG to cost $33 billion.

“Western Australia iron ore sustained strong performance in the September 2012 quarter despite the impact of a planned shutdown associated with the Inner Harbor expansion project,” BHP said in the statement. First ore was loaded in the quarter from two new ship loaders at Nelson Pt. in the harbor, it said.

BHP rose 1.2 percent to A$33.45 at the close of trading in Sydney. The stock has declined 2.8 percent this year, while the S&P/ASX 200 Index gained 12 percent.

Ore Prices

BHP and Rio Tinto Group (RIO), which yesterday reported a 6 percent increase in iron ore output that beat analyst expectations, have both announced they will continue approved spending plans for iron ore expansions in Australia’s Pilbara region. BHP kept its estimate for full-year output to increase 5 percent at its Western Australia operations.

Iron ore, BHP’s biggest product by sales, averaged $112 a metric ton at China’s Tianjin port in the quarter, down 36 percent from the year before, according to The Steel Index Ltd. That prompted imports to climb to the highest in 20 months in September as China’s output fell.

“We remain bullish on iron ore prices, particularly in the short term, and expect miners to maintain super-normal profits until 2014,” Christian Lelong and Marcelo Aguiar, resources analysts with Goldman Sachs Group Inc., said in an Oct. 15 report. High-cost Chinese domestic mines are expected help keep the iron ore price at elevated levels, they said.

Copper output rose 24 percent to 273,900 tons in the quarter, missing the median estimate of 303,900 tons from four analysts surveyed by Bloomberg. BHP said today the result reflected higher grade ores at its Escondida mine in Chile and the impact of industrial action in the corresponding period.

Production from the mine is on track to increase 20 percent this current year after a scheduled maintenance and tie-in activities were completed in the last quarter, it said.

At Olympic Dam, maintenance has been scheduled to fix some technical problems that will shut down the smelter for 27 days in the current quarter, BHP said.

Shale Record

BHP, which booked one-time charges of $2.84 billion on the value of U.S. shale gas assets in August after prices fell, produced 61.25 million barrels of oil equivalent for the quarter, up 19 percent from a year earlier. The median forecast of three analysts surveyed by Bloomberg was 60.8 million barrels.

Robust growth is expected in onshore U.S. liquids production over the remainder of this fiscal year after quarterly output rose to a record 3.9 million barrels of oil equivalent, BHP said.

Coking coal output fell 4 percent to 8.9 million tons, BHP said in the statement, compared with a median forecast of 7.2 million tons. BHP last month said it would shut the Gregory mine in Queensland that’s part of its BHP Billiton Mitsubishi Alliance, cutting as many as 297 jobs, because of falling prices.

To contact the reporters on this story: Elisabeth Behrmann in Sydney at ebehrmann1@bloomberg.net; Soraya Permatasari in Melbourne at soraya@bloomberg.net

To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net

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