BHP Billiton lifts iron ore forecast as it releases results of operational review

Image credit: User: wandee007

The world’s largest mining company BHP Billiton has raised its iron ore output forecast after first quarter output showed a 23 percent jump in the iron ore business.

Picture: (wandee007)
Picture: (wandee007)

BHP Billiton Chief Executive Andrew Mackenzie gave a detailed account of the company’s September quarter results in a media release.

In his statement Mr. Mackenzie expressed his delight at the achieved results, which, according to him, are down to the company’s pursuit of productivity gains and operating excellence.

As evidence to his claim and most obvious example, Mr. Mackenzie pointed out the results yielded by the successful deployment of mobile crushers and the continuous debottlenecking of the supply chain in their Iron Ore business, which resulted in a five million tonnes increase in Western Australia Iron Ore’s production guidance for the 2014 financial year.

Mr. Mackenzie also said that the company is looking to build upon the success achieved so far.

“We continue to build on the substantial US$2.7 billion reduction in controllable cash costs delivered in the 2013 financial year with strong momentum maintained in the first quarter. In addition, a 25 per cent reduction in capital and exploration expenditure to US$16 billion in the 2014 financial year has significantly increased internal competition for capital. Our rate of expenditure will decline again next year and if our investment criteria cannot be met in any one project, product or geography, we will redirect our capital elsewhere or we will not invest.”

Mr. Mackenzie adds that the company has managed to hold on to the strong momentum in the September 2013 quarter and increase the production by 11% compared to the corresponding period from last year.

Furthermore, the company has also registered a record-breaking 62.7 million barrels of oil production with predictions for 2014 remaining unchanged and set at the 250 millions of barrels of oil equivalent.

The optimization of the WAIO (Western Australia Iron Ore) supply chain unlocked substantial value in the 2014 financial year, as the production guideline raised to 212 million tonnes (100% increase).

The WAIO business has also achieved another major success, as the company already received the first production delivery from the Jimblebar Mine Expansion, but also from three other major projects, such as Macedon, Bass Strait Turrum and North West Shelf North Ranking B Gas Compression (all Australia).

Mr. Mackenzie revealed that the work to complete phase one in Jimblebar Mine expansion program is well under way and is expected to be completed by the end of 2015 financial year.

This undertaking, along with the installation of four new crushers, will increase WAIO supply chain capacity to in excess of 220 mtpa (100% basis), with a low cost option to expand its  growth in capacity to approximately 260 mtpa to 270 mtpa.(100% basis).

During the September 2013 quarter, the company has also registered a substantial amount of investments of US$3.4 billion for construction of a desalination facility which will deliver water supply to Escondida (Chile).

A US$2.6 billion investment for finalizing the excavation and lining of the Jansen Potash project production and service shafts is highlighted as well.

Finishing the installation of essential surface infrastructure and utilities is also included in the report.

In addition, the company’s active program of portfolio simplification has yielded a profit of US$2.2 billion since the initiation of the 2014 financial year with the completion of the Jimblebar and Pinto Valley transactions.