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BHP’s Oct-Dec iron ore output hit by train derailment; 2018-2019 guidance on track

BHP’s-OctDec-iron-ore-output-hit-by-train-derailment;-20182019-guidance-on-track-4122.jpg      BHP’s Oct-Dec iron ore output hit by train derailment; 2018-2019 guidance on track


Mining giant BHP’s iron ore production slipped in the October-December 2018 quarter following a train derailment during the period, but fiscal 2018-2019 (July-June) production guidance has been maintained, the company said Tuesday.
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The miner’s share of production from its assets, which came via its Western Australia Iron Ore business, stood at 57.84 million wet mt in the December quarter, showing a slide of 6% both year-on-year and from the July-September 2018 quarter, it said.

RBC Capital Markets analyst Paul Hissey said BHP’s production was weaker than expected, with RBC having forecast 60 million wmt.

BHP, which is the third largest iron ore producer in the world, cited a train derailment on November 5, which resulted in the suspension of rail operations for five days and a production impact of about 4 million wmt, as causing the fall in output.

“During the rail outage, mine stockpile levels were built and are expected to be partially drawn down in the March 2019 quarter,” it said.

Production guidance for BHP’s share has been left unchanged at 241 million wmt-250 million wmt. The December quarter performance brings BHP’s July-December iron ore production to 119 million wmt, meaning it will need to produce 122 million wmt-131 million wmt during January-June in order to hit the guidance range.

On a 100%-basis, the company’s Australian iron ore assets produced 66 million wmt during the three months to December, showing a 9% year on year fall and a 6% drop from the September quarter. That guidance has been maintained at 273 million wmt-283 million wmt.

J.P. Morgan said in a research note Tuesday that the miner’s total iron ore production was in line with its expectation.

BHP COO Arnoud Balhuizen talks about changes in the iron ore and met coal markets, the impact of China’s environmental push on raw materials and the company’s outlook on demand growth in Asia.

Meanwhile, BHP saw an average realized price of $55.62/wmt FOB during July-December, which is down 2% from both a year earlier and the January-June period, it said.

WAIO is an integrated system of four processing hubs and five mines, connected by more than 1,000 kilometers of rail infrastructure and port facilities in the Pilbara region of northern Western Australia.

Operations remain suspended at BHP’s Brazilian Samarco mine following the failure of the Fundao tailings dam and Santarem water dam on November 5, 2015, BHP said.
Source: Platts

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