BHP’s coal production slips due to Australian bushfires but guidance remains unchanged
The ongoing bushfires in Australia knocked BHP’s production of thermal coal, the world’s largest miner announced today, but its 2020 guidance remains in line with forecasts.
Mike Henry described his first set of results since taking over as chief executive from Andrew Mackenzie as “solid”, despite concerns about the situation in the company’s home country, where fires have now burnt an area the size of Germany.
In New South Wales, production of coal fell 11 per cent, which the company said was due to smoke from the bushfires reducing air quality at its operations.
BHP said that “if air quality continues to deteriorate then operations could be constrained further in the second half of the year.”
Extreme weather also impacted oil and natural gas output, with total production down nine per cent.
This was largely due to the knock-on effect of July’s Storm Barry in the Gulf of Mexico, which cut production to 26m barrels.
Social unrest in Chile, which suspended mining operations at a number of companies during the autumn, did not have too much of an impact on copper production, with total output up seven per cent to 885 kilotonnes.
Next year production is expected to double to 1,705 and 1,820 kilotons.
Likewise, the derailment of a train at one of BHP’s iron ore projects in the Australian outback did not stop iron production rising by two per cent to 121m tonnes, with full year guidance predicting 273 to 286m tonnes in 2020.
The firm’s Samarco dam, which has been shut since it failed in 2015, killing 19 people and contaminating local water sources, has received a license to restart operations, and will do once the firm has completed a new filtration system.
BHP will pay $793m to the Renova Foundation, a nor-for-profit set up to repair and compensate damages from the disaster.
Henry said: “We delivered solid operational performances across the portfolio in the first half of the 2020 financial year, offsetting the expected impacts of planned maintenance and natural field decline.
“Production and cost guidance is unchanged, and we remain on track to deliver slightly higher production than last year.”
The mining giant also has six major projects, with a combined budget of $11.4bn, under development, all of which were described as on track.
Shares in BHP fell over two per cent this morning.