SYDNEY-- BHP Billiton Ltd. exported more iron ore than expected
from mines in Australia's northwest last fiscal year even after
lifting guidance twice, as the world's largest mining company aimed
to squeeze more from its operations.
Following years of aggressive expansion in mining regions such
as Australia's resource-rich Pilbara, which accounts for half the
world's seaborne iron-ore supply, BHP has switched its focus to
improving productivity in order to "sweat" or work its existing
mines harder.
On Wednesday, the company reported record iron-ore production of
225 million metric tons for the year through June, up 20% on the 12
months prior. In April, Melbourne-based BHP lifted its expectations
for full-year iron-ore production to 217 million tons--up from
previous guidance of 212 million metric tons and an initial
estimate for the year of 207 million tons.
A key reason for the jump in shipments--which include the share
of output of minority venture partners--was improvements to its
supply chain, as well as the start of production at its newest
mine, Jimblebar, ahead of schedule. BHP has also recently reported
limited disruption from bad weather in Australia's northwest.
BHP's record production result comes just a week after rival Rio
Tinto PLC announced all-time high production in its fiscal first
half.
Miners such as BHP and Rio Tinto have been increasing their
supply of iron ore despite concern among some investors that global
mining companies are adding new supply too quickly.
China's seemingly insatiable thirst for steel has powered the
market in recent years, absorbing around two-thirds of seaborne
supply. However, analysts have said the market may be headed for a
glut as growth in output starts to outpace demand. BHP has already
put the brakes on further projects.
At Port Hedland, the world's largest iron-ore export port, BHP's
plan for a new US$20 billion outer harbor that could accommodate
more ships is in a deep freeze. The Anglo-Australian company, which
relies on iron ore for more than half its earnings, hasn't
committed to building new mines, either.
BHP last year estimated it could raise output by between 20
million and 30 million tons in the coming year or two by running
its eight pits across the Pilbara more efficiently.
"Our focus on productivity has resulted in a significant
improvement in operating performance," Chief Executive Andrew
Mackenzie said in a statement. "We expect to maintain strong
momentum and...remain focused on value over volume as we prioritize
our brownfield development options and consider the next phase of
portfolio simplification."
BHP earlier this year signaled it may pursue a new wave of asset
sales as it puts more focus on commodities such as iron ore and
petroleum that already account for the bulk of its earnings.
The company also produced more coal over the year as it ramped
up production at its Daunia mine in eastern Australia. BHP reported
a 20% rise in production of metallurgical coal, used in
steelmaking, although its annual output of thermal coal, used to
generate electricity, was virtually flat.
Meanwhile, petroleum output was up 4% at 246 million barrels of
oil equivalent, underpinned by rising supplies from its onshore
U.S. assets.
BHP said separately that it expects to record charges of as much
as US$1.3 billion against its second-half earnings due to asset
impairments and mine-site rehabilitation costs, as well as
redundancy costs.
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com
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