“Better productivity will be the sole source of volume growth at Western Australia Iron Ore in the 2016 financial year”, MacKenzie said in a statement on 22 July.
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Mining giant BHP Billiton Ltd. (BHP, BHP.AX, BBL, BLT.L) on Tuesday reported a 6 percent increase in iron ore production for the fourth quarter, while production of metallurgical coal grew 13 percent. The impairments come on top of $2 billion in post-tax writedowns to its USA shale oil division announced last week. BHP has lifted iron ore production by 13 per cent during the year, contributing to a nine per cent increase it total group production for the year.
Those costs do not include royalties and freight, but still illustrate that BHP Billiton is easily profitable with iron ore prices now sitting at $US52.10 a tonne, unlike some of its smaller rivals.
Their U.S. onshore oil rigs produced 67% more this year, up to 56 MMboe (million barrels of oil equivalent).
Iron ore is still the flagship and BHP is showing no signs of rethinking a gameplan to take annual production close to 300 million tonnes annually from 254 million in fiscal 2015.
Rising seaborne iron ore supplies over the next two quarters will probably overwhelm weak demand from mills in China, according to Goldman Sachs, which said that a global glut was entering its second year.
Guidance for this year disappointed some analysts, even so, with petroleum production slated to be 7% lower at 237MMboe and copper 12% lower at 1.5Mt.
Chief executive Andrew Mackenzie said the business had performed well over the 2015 financial year.
“We have improved the performance of our equipment, reduced costs, and increased volumes despite a significant reduction in capital spend”.
BHP also flagged $350 million to $650 million in “additional charges” which mostly relate to its copper business.
Its Stybarrow asset about 65km off the northern coast of Western Australia reached the end of its life and ceased production on June 30, the company said.
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He said BHP’s simpler portfolio following the demerger of South32 will help it keep up the pace of operational improvements to help support cash generation, margins and returns.
