Strong BHP performance undermined by Qld coal royalties
Tuesday, July 19th, 2022
A strong fourth quarter has capped off a year of significant progress for BHP, with iron ore leading the way, generating record sales volumes for the 2021–22 financial period.
BHP sold 284 million tonnes of iron ore across the 12 months, as South Flank’s ramp-up to full production capacity (80mt per annum) tracks ahead of schedule.
An average rate of 67mtpa was achieved at South Flank in the June 2022 quarter, contributing to record production from the Mining Area C (MAC) hub and record lump sales.
BHP produced 253mt of iron ore in FY22, with the Western Australia Iron Ore (WAIO) operations making up 249Mt of that and Samarco the remaining 4mt, in line with BHP’s iron ore production from the 2020–21 financial year.
The company said the performance had been underpinned by safe, reliable operations and firm demand for its commodities.
Chief Executive Officer Mike Henry said the year was once again fatality-free and BHP continued to improve safety issues, which included addressing sexual assault and harassment, racism and bullying.
“We delivered record full-year sales volumes at our iron ore business in Western Australia as a result of reliable operational performance and the South Flank project,” he said.
“In copper, Escondida in Chile had record material mined and near-record concentrator throughput, while Olympic Dam in South Australia performed strongly in the fourth quarter after planned smelter maintenance.”
Henry said Queensland metallurgical coal delivered strong underlying performance for the quarter in the face of significant wet weather.
As well, BHP is assessing the impacts on BMA economic reserves and mine lives as a result of the increase in coal royalties by the Queensland Government.
“The near tripling of top end royalties has worsened what was already one of the world’s highest coal royalty regimes, threatening investment and jobs in the state,” he said.
“Also during the year, we merged our petroleum business with Woodside, completed the sales of BMC and Cerrejón, and decided to retain New South Wales Energy Coal until the cessation of mining in 2030 subject to relevant approvals.
“We also unified our corporate structure, and added to our global options in copper and nickel.
“Broader market volatility continues and we expect the lag effect of inflationary pressures to continue through the 2023 financial year, along with labour market tightness and supply chain constraints.
“Over the year ahead, China is expected to contribute positively to growth as stimulus policies take effect, however, the continuing conflict in the Ukraine, the unfolding energy crisis in Europe and policy tightening globally is expected to result in an overall slowing of global growth. Our strong focus on safety, operational reliability, cost control and social value will help us navigate these challenges and continue to deliver for all of our stakeholders.”