Reuters Australia
BHP production growth driven by copper, iron ore
Wednesday July 23, 11:31 AM
(Adds details)
By James Regan
SYDNEY, July 23 (Reuters) - BHP Billiton Ltd/Plc (ASX: BHP.ax) BLT.L, the world's biggest mining house, reported a raft of annual production gains on Wednesday led by strong fourth-quarter output of copper and iron ore, both of which are in high demand in China.
Fourth-quarter copper output rose 14 percent versus the comparable year ago period, while iron ore rose 15 percent, though coal used in steel making dropped 18 percent, BHP said.
Production of coals used in power generation was in line with the last quarter of the previous year.
Overall, annual production rose in 13 commodities despite rising costs across its operations.
"This was achieved in an environment in which supply disruptions and input costs pressures are placing challenges on the industry response to continued strong global demand for commodities," BHP said.
Like close rival Rio Tinto Ltd/Plc (ASX: RIO.ax) RIO.L, BHP was running its mines and refineries around the world hard amid high demand in China and across much of Asia for raw materials.
Rio, the target of an all-share hostile takeover offer by BHP worth around $140 billion saw its own output of iron ore aluminium and other industrial staples soar in the last quarter as it too turned up production, prodded by higher selling prices.
Output of copper from the Escondida mine in Chile, the world's largest and majority owned by BHP, climbed 4 percent to 178,200 tonnes in the last quarter, while cathode production rose 7 percent to 40,300 tonnes, BHP said.
It also warned that Escondida's total output would drop 10-15 percent in the 2009 financial year and stay that way in subsequent years due to lower ore grades.
London Metal Exchange-traded three-month forward aluminium MAL3 hit an all-time high of $3,380 a tonne this month, while three-month copper MCU3 reached a record $8,940 a tonne. BHP and Rio have also secured a near-doubling in contract iron ore prices.
Analysts expect Rio to report a first-half profit of $4.258 billion versus $3.353 billion last year when it reports on Aug. 26, according to Reuters Estimates. BHP's (ASX: BHP.ax) BLT.L consensus forecast is for a second-half profit of $6.05 billion, versus $7.25 billion, when it reports Aug. 21.
BHP Chief Executive Marius Kloppers has argued combining BHP and Rio would lead to billions of dollars in cost savings at mine sites, ports and refineries.
Rio Chief Executive Tom Albanese has countered that the offer of 3.4 BHP shares for each Rio share is too cheap given Rio's assets and growth potential. (Reporting by James Regan; Editing by James Thornhill)
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