BHP Downgrades Fiscal Year Escondida, Nickel Production Guidance -- Update

By Rhiannon Hoyle

BHP Group Ltd. said it will produce less copper than expected at the Escondida mine in northern Chile this fiscal year, but stuck with its annual group copper-production estimate, citing the strong performance of other operations in Chile and Australia.

The world's largest miner by market value cut its annual estimate for nickel production, in part due to heavy rainfall.

BHP on Friday downgraded its production guidance for the Escondida copper operation in the year through June to between 1.05 million and 1.08 million metric tons, from 1.08 million to 1.18 million tons previously. Geotechnical challenges in a high-grade part of the pit have prompted changes to the mine plan, resulting in less mined ore and the processing of more low-grade stockpiles, it said.

Still, group copper production totaled 405,900 tons in BHP's third fiscal quarter, up 10% year-on-year.

"Given the strong performance at the other copper assets, full-year total copper production guidance remains unchanged" at 1.635 million to 1.825 million tons, the company said. The global mining giant said it expects annual production at its Olympic Dam and Pampa Norte operations to be toward the upper end of its estimates.

For its nickel business, BHP cut its annual production forecast to between 75,000 and 85,000 tons, from 80,000 to 90,000 tons previously.

The company's Australian nickel operations were affected by heavy rainfall in early April, it said. In March, BHP also told one of its nickel suppliers, Mincor Resources NL, that it would no longer accept a product that contained high levels of arsenic.

BHP kept fiscal-year production guidance for its iron ore, energy coal and metallurgical coal businesses unchanged, although said output from the BHP Mitsubishi Alliance, the world's major steelmaking coal exporter, is expected to be at the bottom of the miner's guided range following heavy rainfall.

BHP, also one of the world's top iron-ore exporters, reported record production from its Australian iron-ore mines for the first nine months of its fiscal year.

Third-quarter iron-ore output was flat on a year ago at 59.8 million tons. The company said there was no significant damage or reported injuries at the iron-ore mining operations in Australia's remote northwest as a result of the recent Tropical Cyclone Ilsa.

BHP Chief Executive Mike Henry took an optimistic tone on global commodity demand.

"Recent engagements with customers in China and India have reaffirmed our positive outlook for commodity demand, with China's economic rebound and solid momentum in India's steelmaking growth helping to offset the impact of slowing growth in the U.S., Japan and Europe," he said.

BHP has been seeking to increase its exposure to commodities such as copper that it expects to be vital to a global energy transition. Earlier this month, shareholders of OZ Minerals Ltd., a copper-and-gold producer, blessed a takeover plan by BHP that is expected to be finalized on May 2.

"We are now focused on the safe integration of the two businesses and we look forward to building an internationally competitive copper business in South Australia and incorporating West Musgrave into our nickel options in Western Australia," Mr. Henry said.

BHP also said it has identified a new copper-porphyry mineralized system in Arizona, and that it has been granted environmental approval for a new phase of exploration drilling at its Oak Dam site in South Australia.

Write to Rhiannon Hoyle at [e-mail]

(END) Dow Jones Newswires

April 20, 2023 20:26 ET (00:26 GMT)

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