Production from BHP’s most profitable business, its iron ore operations in Western Australia, hit 45 million tons in the three months to June, up from 37.6 million tons in the previous quarter and ahead of analyst forecasts, according to companys statement in a production update on Wednesday.
The world’s biggest resources company, experienced a strong finish to its financial year with production at two of its largest divisions beating market expectations in the latest quarter. Shares in BHP, which have fallen 10% in the year to date, gained 2.3% to A$34.19 on the Australian Securities Exchange. Copper production climbed 8.5% to 333,200 tons in the quarter, which also topped market expectations.
The only weak spot analysts noticed was BHP’s petroleum business, where production in the June quarter reached 59 million barrels. That meant total petroleum production over the financial year to June increased by 6% to 236 million – 4 million barrels short of company guidance. BHP argued the miss came from extended maintenance and drilling delays at its non-operated assets in the Gulf of Mexico.
Companys onshore operations on the other side, were performing much better beating firms expectations. “Drilling and development expenditure was $4.8 billion in US onshore, ahead of expectations ($4 billion),” said UBS analyst Glyn Lawcock. “But better well productivity sees [BHP’s] 2014 budget under review.” he added for Financial Times.
Considering tougher market conditions and uncertainty over demand from China, BHP chief executive Andrew Mackenzie promised to cut billions of dollars from the company’s spending and focus on labor productivity.
BHP and rivals Rio Tinto and Fortescue Metals Group are all analysing new opportunities ahead, making plans to increase production of the steel-making ingredient from their mines in the Pilbara region of Western Australia.
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