BHP Billiton Achieves Record Production in Iron Ore, Coal and Petroleum
BHP Billiton (ASX:BHP) is continuing to impress investors. The Australian company posted record production output in three commodities -- iron ore, coal and petroleum --for the second quarter of June, as well as boosting its guidance for the year.
BHP achieved production of 225 million tons of iron ore for the quarter, up 19 percent from the same period last year. The company is now expected to produce 245 million tons in the current 2015 financial year.
Investors responded confidently to production reports as shares for BHP hit a four-month high of $39.22 on the Australian Securities Exchange. It’s the 14th consecutive year BHP has recorded higher-than-expected production numbers.
“Our focus on productivity has resulted in a significant improvement in operating performance at each of our major businesses this year, with a nine per cent increase in group production and record output at 12 operations,” chief executive Andrew Mackenzie said.
BHP also increased its metallurgical coal by nine percent in the quarter to 11.89 million tons. Despite a 20 percent fall in prices for hard coking coal, the company improved its full year production to 45.08 million tons, beating its guidance of 43.5 million tons.
“Western Australia Iron Ore and Queensland Coal annual production exceeded guidance, with both rising by more than 20 per cent as we delivered more tons from existing infrastructure and growth projects ahead of schedule,” said Mackenzie.
BHP rounded out the trifecta by increasing its petroleum production by nine percent to a record 64.7 million barrels in the June quarter. The company produced 246 million barrels for the year, squeezing by it guidance of 245 million barrels.
"In petroleum, we are investing in our highest-return acreage while a broader improvement in productivity is expected to underpin stronger iron ore, copper and metallurgical coal volumes," said Mackenzie.
"We will remain focused on value over volume as we prioritize our brownfield development options and consider the next phase of portfolio simplification."
According to BHP, the end of the 2014 financial year, it had eight projects under development with a combined budget of $14.1 billion.
Gerald Group resolves iron ore dispute with Sierra Leone
Gerald Group, the US commodity trader, will pay Sierra Leone $20mn and cede a 10% stake in an iron ore project as part of the resolution to a nearly two-year dispute that led to the shutdown of production, the two sides revealed.
Gerald's wholly-owned subsidiary SL Mining filed for arbitration in August 2019 over a royalty payment dispute and suspended the Marampa mine the following month. Sierra Leone's government responded by cancelling its mining licence.
As part of the agreement signed on Friday, Sierra Leone will take a non-dilutable 10% stake in a new company that will replace SL Mining and resume operations at Marampa by June 1, Gerald said in a statement.
Gerald will make two $10mn payments this year and will have the immediate right to ship its current stockpile of about 707,000 tonnes of iron ore, it said.
Both sides will withdraw their legal claims before the International Chamber of Commerce (ICC) and International Centre for Settlement of Investment Disputes (ICSID), the statement added.
Gerald’s chairman and CEO Craig Dean commented: "I am delighted that we have been able to resolve our differences and have a fresh start and new beginning with the government of Sierra Leone."
Sierra Leone's Mines Minister Timothy Kabba told a news conference on Tuesday that the agreement was a milestone for the country.
"Whatever the pain we may have borne or dreaded throughout these two years ... this outcome justifies our action," he said.
Gerald estimates that Marampa holds about 1 billion tonnes of iron ore with a potential lifespan of 30 years.
Back in 2019, Dean spoke with Mining about the development of Marampa and commented: "SL Mining offers a substantial opportunity for Gerald Group as our Marampa mine in Sierra Leone is set to deliver six million tonnes of high-grade iron ore during its operational life. If you analyse the iron ore market it has transformed, even from a couple of years ago when prices were very low. Now prices have stabilised we’re in a favourable position with our first shipments leaving for China.
"Our goal is to make ‘Marampa Blue’ an internationally recognised premium grade iron ore brand. We intend to expand the delivery of high-grade 65% iron ore concentrate to markets in Europe and Africa.”