BHP Output Mostly Down; Flags Productivity Hit, Copper Guidance Lift

   By Rhiannon Hoyle 
 

SYDNEY--BHP Group Ltd. (BHP.AU) recorded weaker quarterly production of commodities including iron ore and petroleum and forecast a first-half productivity hit totaling US$600 million because of disruptions to operations that included a train derailment in a remote part of Australia.

The company also raised its full-year forecast for copper production after it called off the sale of its Cerro Colorado copper mine in Chile.

BHP, the world's biggest miner by market value, on Tuesday said it produced 58 million metric tons of iron ore in the three months through December, down 6% on the same period a year earlier.

In November, BHP was forced to derail a runaway train consisting of four locomotives and 268 loaded wagons that ran loose for more than 50 miles without a driver. The train rolled away after its operator disembarked to inspect one of the wagons and didn't secure a brake.

BHP temporarily suspended all of its rail operations in the Pilbara to investigate the incident and recover the rogue train.

The derailment helped to prop up iron-ore prices, which have been trading above analyst expectations as China continues to produce massive amounts of steel. China's steel-product output rose 8.5% last year.

BHP's Australian iron-ore shipments account for almost one-fifth of seaborne trade in the commodity. It is the world's third-largest iron-ore exporter, behind Vale SA (VALE) and Rio Tinto PLC (RIO.LN).

BHP said its productivity drive, aimed at working its mines and infrastructure network harder, had also been set back in the half by a plant outage at its Olympic Dam copper mine in Australia and a plant fire at its Spence mine in Chile.

BHP meantime raised its full-year copper production forecast to between 1.645 million tons and 1.740 million tons to reflect the retention of Cerro Colorado. It reported a 2% rise in second-quarter copper output, to 416,000 tons.

The company also recorded a sharp fall in quarterly petroleum production tied to lower gas sales. It said second-quarter output of petroleum products fell by 8% to 30 million barrels of oil equivalent.

Write to Rhiannon Hoyle at [e-mail]

(END) Dow Jones Newswires

January 21, 2019 17:19 ET (22:19 GMT)

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