BHP Billiton cuts iron ore guidance by 10 mln tonnes on bad weather, rail issues

Mining and energy giant BHP Billiton cut its iron ore guidance by 10 million tonnes due to bad weather and rail maintenance, but said it was maintaining its guidance for copper, coal and petroleum production.

The company lowered its iron ore production guidance to 260 million tonnes from 270 million tonnes, a day after Rio Tinto cut its iron ore production for 2017 by as much as 20 million tonnes to between 330 and 340 million tonnes.

Rio Tinto blamed the cut on delay in its driverelss train project.

BHP Billiton said in a statement that total iron ore production for the nine months ended March 2016 was broadly unchanged at 171 million tonnes and added that production for the 2016 financial year is now expected to be approximately 229 million tonnes, three per cent below prior guidance.

“Our WAIO (Western Australia Iron and Ore) business remains focused on productivity in our integrated supply chain and this is further supported by the 24-month rail renewal and maintenance program that has been initiated. These improvements in our supply chain along with the ramp-up of additional capacity at the Jimblebar mining hub, will deliver an increase in system capacity to 290 million tonnes per annum over time.

The statement said that metallurgical coal production for the nine months ended March 2016 remained broadly in line at 31 million tonnes. Guidance for the 2016 financial year remains unchanged at 40 million tonnes, it added.

Queensland Coal production was reported to be flat as record production at six mines, underpinned by increased plant and equipment utilisation, offset the completion of longwall mining at Crinum that is now under care and maintenance, a convergence event at the Broadmeadow mine and unfavourable weather conditions.

The statement said that the first shipment from the Haju mine in Indonesia was achieved during the March 2016 quarter. BHP Billiton is conducting a strategic review of the long-term future options for its Indonesian coal interests, IndoMet Coal, which comprises seven coal contracts of work within the provinces of Central and East Kalimantan.

Total petroleum production for the nine months ended March 2016 fell by four per cent to 184.1 MMboe, the statement said, adding that guidance for the 2016 financial year remains unchanged at 237 MMboe as the strong performance by our conventional business offset the reduction in onshore US activity and the divestment of gas business in Pakistan.

Crude oil, condensate and natural gas liquids production for the nine months ended March 2016 decreased by four per cent to 89.7 MMboe, the statement added.

Total copper production for the nine months ended March 2016 decreased by eight per cent to 1.2 Mt, the statement said, as continued strong operating performance across the business was offset by grade decline at Escondida, as anticipated. Guidance for the 2016 financial year remains unchanged at 1.5 Mt, it added.

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