BHP Group Ltd reported that iron ore production in its fiscal third quarter rose 3% year-on-year, driven by stronger performance at its Western Australia operations, while the company maintained its annual production guidance.
On a 100% basis, iron ore output from BHP's Western Australia operations was 69.8 million metric tonnes in the quarter ended March 31, up 3% from the same quarter a year earlier but down 10% from the previous quarter, the company said in a statement.
Shipments from the Western Australia operations, particularly at Port Hedland, were affected by two major tropical cyclones in February and March, which in turn disrupted exports and weighed on production during the quarter.
Guidance and commercial developments
BHP left its annual iron ore production guidance unchanged at 284-296 metric tonnes. The company also said it had "concluded iron ore sales contract negotiations" with China Mineral Resources Group. The statement noted that this followed earlier reports that China’s state-backed iron ore buyer had approved additional purchases from BHP. BHP characterized the agreement as marking some concession in a months-long commercial dispute with a major customer in China.
Prices and sales metrics
The company recorded a 2% decline in average realized prices on its iron ore sales, with the average falling to $84.91 per wet metric tonne.
Copper performance
BHP's copper production declined 7% year-on-year in the quarter to 476.8 kilotonnes, reflecting disruptions at its Escondida and Pampa Norte operations. Despite the fall in volumes, realized prices on copper sales were substantially higher, increasing 29% to $5.47 a pound after a rally in the first quarter.
The company maintained its annual copper production outlook of between 1,900-2,000 kilotonnes and said output was expected at the upper end of that guidance range.
Outlook and context
While production volumes were mixed across metals, BHP's decision to keep its iron ore and copper guidance unchanged suggests the company expects to meet previously stated targets despite short-term disruptions to shipments and site-specific operational issues. The completion of commercial negotiations with a major Chinese buyer resolves a period of dispute, according to the company's statement.