BHP Cuts Iron-Ore Output Target; Plans Petroleum Exploration Program

   By Rhiannon Hoyle 
 

SYDNEY--BHP Billiton Ltd. (BHP.AU) said it will produce less iron ore than expected this fiscal year, as it reported a fall in quarterly shipments.

The world's third-biggest iron-ore exporter on Wednesday said its global output of the commodity, stripping out the share of partners, was 53 million metric tons for the three months through March, down 7% on the previous quarter. Production was down 10% on-year.

The company consequently lowered its forecast for the year through June to 229 million tons, from 237 million tons previously.

The miner said its sales of iron ore, the main ingredient in steelmaking, were disrupted by bad weather in northwest Australia in late January, as well as the start of a rail maintenance program.

BHP said output from its key Western Australia iron-ore mining unit, including the share of partners, fell 4% on-quarter to 61 million tons. The company cut its annual target for that business to 260 million tons from an earlier projection of 270 million.

A day earlier, Anglo-Australian rival Rio Tinto PLC (RIO.LN) also reported a sharp fall in quarterly shipments, which it blamed in part on a tropical cyclone.

BHP's iron-ore production was additionally weighed by the shutdown of the Samarco mining operation it owns in Brazil with Vale SA (VALE). The miner said the final shipment of existing stockpiles from that site--shut since a deadly tailings-dam collapse in November--is expected to settle this quarter.

Output of other commodities was mostly lower as well. BHP recorded petroleum production of 59.4 million barrels of oil equivalent, a 1% drop on the prior quarter and 3% fall on a year ago. Volumes have declined after BHP reduced its spending on oil-and-gas, including cutting the number of rigs it operates, a move designed to conserve cash and reserves amid an oil-price downturn.

On Wednesday, however, BHP said a US$640 million exploration program is now planned this year for "testing of our future growth opportunities."

Production of coking coal, also used in steelmaking, was down 4% on-quarter, while the miner's output of copper, its so-called fourth "pillar," was up 5%.

Write to Rhiannon Hoyle at [e-mail]

(END) Dow Jones Newswires

April 19, 2016 19:04 ET (23:04 GMT)

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