MELBOURNE (Oct 22): BHP Billiton Ltd., the world’s biggest mining company, said first-quarter iron ore output rose 17 percent as it continues to expand production in the face of tumbling prices.
Production of the steelmaking material was 57.1 million metric tons in the three months ended Sept. 30, from 49 million tons a year earlier, Melbourne-based BHP said today in a statement. That was in line with the 56.5 million ton median estimate of five analysts surveyed by Bloomberg.
Output of coking coal, also used in steelmaking, rose 25 percent, the company said.
“With our focus now on maximizing the value of existing infrastructure, we plan to reduce costs and invest judiciously in very low capital cost debottlenecking initiatives,” Chief Executive Officer Andrew Mackenzie said in the statement.
BHP advanced 1.3 percent to A$34.18 at 10:17 a.m. in Sydney trading, trimming its decline this year to 10 percent. Australia’s benchmark index rose 1.1 percent.
Iron ore has declined 39 percent this year as the biggest suppliers, Vale SA, Rio Tinto Group and BHP, increased low-cost production in Australia and Brazil, adding to a global surplus. Global seaborne output will exceed demand by 26 million tons this year and 41 million tons in 2015, according to UBS AG.
About 376 million metric tons of supply will be added between 2015 and 2018, adding further pressure on prices and producers’ earnings amid weak growth in global steel production, Moody’s Investors Services said in an Oct. 17 note.
BHP is seeking to raise annual iron ore production, including output attributable to its project partners, to 290 million tons by mid-2017 and cut costs to less than $20 a metric ton, Mackenzie said in the statement.
Rio Tinto, the cheapest iron ore producer, plans to add about 60 million tons of supply by 2017 and increased output in the three months through September by 13 percent, it said Oct. 15. Vale, the world’s biggest exporter, is seeking to double shipments to China in the next five years, it said in August.
BHP reiterated its full-year output guidance of 245 million tons from its Western Australian mines, including tons attributable to partners.
Coking coal production rose to a record 12.8 million tons as the new Caval Ridge mine in Queensland operated at capacity, BHP said. That compares to a 11.5 million ton estimate of the five analysts surveyed by Bloomberg.
Copper production fell 3 percent to 389,400 tons, missing the 420,000 ton median estimate of five analysts surveyed by Bloomberg. Output was lower on declining grades, industrial activity and a power outage at Escondida in Chile, and lower grades at Antamina in Peru, the producer said in the statement.
BHP’s total petroleum output was 67.4 million barrels of oil equivalent, up 7 percent from a year earlier. That beat the 63 million barrel median estimate of 5 analysts surveyed by Bloomberg.
Thermal coal output declined 9 percent to 17.8 million tons, BHP said.