BHP maintains iron ore production guidance; revises met coal to lower-end

Sydney — Mining giant BHP has maintained its 2019-20 (July-June) iron ore production guidance but the company expects its metallurgical coal production to be at the lower end of the guidance due to rainfall in the January-March quarter.

The miner's Western Australian Iron Ore business's production guidance on an 100% basis stays the course at 273 million mt-286 million mt after production of 68 million mt in January-March, BHP said Tuesday in its operational review.

The March quarter production is up 7% year on year and is at the October-December levels.

BHP's average realized price for iron ore in January-March was $74.28/wet mt FOB which compares with $78.30/wmt over the July-December period, the company's results showed.

The company noted that iron ore prices have been resilient to the COVID-19 outbreak so far.

"This outcome reflects solid Chinese pig iron production in the year-to-date, and a continuation of the relatively soft seaborne supply picture that was in evidence prior to the shock," the company said.

METALLURGICAL COAL

Due to rainfall in Queensland, Australia, BHP is now expecting total metallurgical coal production for fiscal 2019-20 to be at the lower end of the previous given range of 73 million mt-79 million mt.

Production in the January-March quarter was at 16 million mt, down 8% year on year and 18% lower than the October-December period.

"Potential impacts from COVID-19, including weak demand as a result of customer disruptions, in the June 2020 quarter, represent possible downside risk to full year guidance," the company noted.

BHP saw an average metallurgical price of $132.72/mt in January-March, down from $140.94/mt in July-December. The metallurgical coal average for the March quarter consisted of $145.69/mt for hard coking coal and $93.36/mt from weak coking coal, it said.