Copper was the highlight of BHP’s (BHP) first half, with the Olympic Dam and Antamina mines beating expectations in the six months to December 31.
This is the first major operations announcement since Mike Henry took over the chief executive job on 1 January. He said the “solid” half saw the company offsetting planned maintenance across the portfolio and field decline in the petroleum division with higher production.
While copper prices remain weak, there was a major uptick in production from Olympic Dam (up 32 per cent year-on-year) and a 4 per cent year-on-year increase at Escondida. The overall production of 886,000 tonnes (t) was 5 per cent ahead of BMO forecasts, and analyst Edward Sterck said the copper outlook was also promising. This higher production and 2 per cent higher average price of $2.60 (£2) per pound (lb) will be important for the division’s finances for the period, as it will have a $500m impairment from cancelling coal power contracts for the Escondida and Spence mines in Chile, with supply moving to renewable sources.
BHP has said this will be cheaper in the long-term because of the unit cost of renewable energy. BMO has forecast copper destocking this year amid improved demand in China. Fellow base metal nickel was down 11 per cent year-on-year due to maintenance at BHP’s refinery and smelter, but a 26 per cent jump in the average realised price to $15,715/t has more than covered this drop.
Elsewhere, iron ore production was below expectations (although ahead of the year before) because of maintenance work hitting throughput in October. The coal division was hit by smoke from bushfires in Australia in December, which cut visibility at mines and reduced air quality. The miner has maintained full year guidance for both bulk commodities.
