BHP Sees China Opening Boost as Iron Ore Output Hits Record


(Bloomberg) — BHP Group Ltd., the world’s biggest miner, reported record iron ore production for its fiscal first half, predicting China would drive commodity demand in 2023 as the country opens up.

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(Bloomberg) — BHP Group Ltd., the world’s biggest miner, reported record iron ore production for its fiscal first half, predicting China would drive commodity demand in 2023 as the country opens up.

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The Melbourne-based miner produced 132 million tons of the steelmaking material in the six months to Dec. 31. The record was achieved through a strong supply-chain performance, as it looks to demand increasing from its biggest customer. 

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“China’s pro-growth policies, including in the property sector, and an easing of Covid-19 restrictions are expected to support progressive improvement from the difficult economic conditions of the first half,” BHP Chief Executive Officer Mike Henry said in a statement Thursday. The nation was expected to produce more than 1 billion tons of steel for the fifth straight year, he said. 

The record half for iron ore production comes after BHP and rivals including Rio Tinto Plc and Vale SA endured a volatile 2022 as the price of iron ore whipsawed amid ambiguity over China’s demand prospects. Still, it finished the year little changed and hopes are rising for a better 2023, as the world’s biggest metals consumer dismantles Covid Zero measures, reopens its economy and pledges more support for the key construction and infrastructure sectors.

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For the three months to Dec. 31, BHP produced 66.9 million tons of iron ore, more than analysts’ median estimate of 64.2 million tons. Metallurgical coal production was up 10% on a year earlier, copper rose 16%, and nickel was down 18%.

BHP left forecast production for iron ore unchanged for fiscal 2023, but warned copper output would be at the low end as a result of constraints at Escondida in Chile, the biggest copper mine in the world, which has been hit by industrial action. The company was boosted by higher output at the Olympic Dam mine in South Australia. 

Copper, along with nickel and potash, is key to BHP’s growth plans as iron ore demand plateaus and it reduces its fossil fuel business. It’s expected to acquire OZ Minerals Ltd. later this year, which will boost copper production by around 7%, but gave no update on when that is likely be finalized. The deal is subject to OZ Minerals’ shareholders voting in favor.

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Metallurgical coal production would also be at the low end of guidance due to wet weather in north-eastern Australia, BHP said. Average realized metallurgical prices fell 37% in the six months to Dec. 31 but were still above last year’s prices. Prices for thermal coal used in electricity generation rose 17% half-on-half, driven by the global energy crunch. 

Rio Tinto, the world’s top iron ore producer, on Tuesday said fourth-quarter shipments of the material rose 4% and kept its 2023 output guidance unchanged except for copper, where it sees higher-than-expected output as more production comes online following its acquisition of Turquoise Hill Resources Ltd.

(Adds details on copper, met coal production)


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