Major player in the oil, gas, and mineral exploration industry, BHP Group [ASX:BHP] has said its WAIO (Western Australia Iron Ore) achieved record production of 146 million tonnes (Mt) for the half year and stated its production guidance for FY23 is unchanged.
Escondida and BHP Mitsubishi Alliance (BMA) are currently performing at the low end of their guidance ranges.
BHP was trading at $49.52 a share Thursday morning, mostly flat on the day’s trade.
Over the last 12 months, the stock has risen nearly 20% in share value.
Source: TradingView
BHP Group’s half-year operational review
For its first activities announcement for the new year, BHP has said it wouldn’t be changing its FY23 production guidance, especially as Escondida and BMA are presently trending at the lower end of their guidance ranges.
The same can be said for the full year’s cost guidance for BHP Escondida, and WAIO operations costs will remain the same, as previously posted.
Unit cost guidance for BMA and NSWEC (New South Wales Energy Coal) increased, reflecting production impacts from unfavourable weather conditions as well as continuing inflationary pressure.
BHP said that its WAIO achieved record production for the half year, pulling in 146 Mt on a 100% basis.
The company also drew attention to its new Scheme Implementation Deed with OZ Minerals [ASX:OZL] to acquire 100% of OZL, using a scheme arrangement for a cash price of $28.25 per OZL share.
The resource big-name also reiterated that it had invested US$50 million in the Kabanga Nickel Project in Tanzania, increasing its equity stake to 14.3%. Kabanga Nickel has also offered BHP the option to increase its interests by 51%, yet confirmation on whether this offer will be taken up by BHP is not yet evident.
CEO of BHP Mike Henry commented on the company’s production for the half year:
‘WA Iron Ore (WAIO) delivered record production for the half year through strong supply chain performance, supported by the ongoing ramp-up at South Flank. Copper production at Escondida rose despite road blockades in Chile in the December quarter and the Spence Growth Option continued to ramp up, while Olympic Dam’s ongoing smelter performance saw near-record material processing and record gold production.
‘In Queensland, coal production was again impacted by heavy rainfall. As foreshadowed, we are seeing the impact of inflation across our global supply chains and continue to focus on productivity and controllable costs.’
BHP considers returning Chinese influence
BHP anticipates some major changes in commodities in the year ahead, especially as China settles back into the picture, having reopened with a powerful comeback for the start of 2023.
China’s reopening will indeed boost consumer demand, could trigger a commodity price rebound, and could spell higher demand for oil.
‘BHP believes China will be a stabilising force when it comes to commodity demand in the 2023 calendar year, with OECD nations experiencing economic headwinds’, the company stated.
‘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. China is expected to achieve its fifth straight year of over 1 billion tonnes of steel production.’
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Regards,
Mahlia Stewart,
For The Daily Reckoning Australia
