BHP Group [ASX:BHP] echoed Whitehaven Coal [ASX:WHC] by admitting its September quarter output was marred by ‘record wet weather’ and ‘ongoing labour shortages’.
BHP reported heavy rainfall was ‘more than three times’ last year’s, hindering BHP’s metallurgical coal production.
However, like Whitehaven, BHP said its production and unit cost guidance remains unchanged for the 2023 financial year.
BHP shares were flat on the news. The producer is down 25% in the last six months:
Source: tradingview.com
BHP’s quarterly results ‘could have been worse’
BHP’s latest quarterly results for the period ending September 2022 were:
- Copper production rose 9% on the same quarter last year, totalling 410.1Kt.
- Western Australian Iron Ore (WAIO) continued to perform strongly, with production up by 3% relative to the same period last year, totalling 63.9Mt for the quarter.
- Coking coal mining dipped 19% compared to the June quarter, and Queensland sales decreased 25%.
- Metallurgical coal went up 1% since the same time last year, totalling 6.7Mt.
- NSW coal production decreased 34%, and sales dipped 38% compared to the June quarter.
- Nickel production increased 16% year-on-year, totalling 20.7Kt.
Jansen Stage 1 is ticking along according to the company’s plan. BHP reported civil and mechanical construction activities progress at both site and port.
BHP says it will be targeting first production at the Jansen Stage 2 site by 2026, having already boosted Jansen Stage 2 studies.
The miner said it had signed a large-scale renewable Power Purchase Agreement (PPA) with Alinta Energy, chasing the minimisation of greenhouse gas emissions.
The PPA will halve greenhouse gasses produced by its WAIO facilities coming into effect by the end of 2024.
BHP has also signed an MoU with India’s Tata Steel to develop lower-carbon iron and steelmaking technology, which it hopes will reduce greenhouse gases within integrated steel mills by around 30%.
A new partnership with Pan Pacific Copper is to achieve similar ends for its maritime operations.
Source: BHP
BHP beats the odds
BHP was not as hard hit as some other miners operating from recently flooded regions of Queensland and NSW.
BHP managed to mitigate the impact by an inventory drawdown.
Mike Henry, BHP’s CEO, was upbeat about BHP’s position:
‘We have started the new financial year strongly, achieving safe and reliable operating performance
‘We expect global macro-economic uncertainty in the short term to continue to affect supply chains, energy costs, labour markets and equipment and materials availability. BHP remains well positioned, with a portfolio and balance sheet to withstand external challenges and a strategy positioned to benefit from the global mega-trends of decarbonisation and electrification.’
Five inflation-busting stocks
BHP said it expects the global macroeconomic uncertainty stoked by high inflation and rising interest rates to continue.
BHP thinks supply chains, energy costs, labour markets, and equipment availability will be affected by the macroeconomic environment.
Clearly, rising prices are hurting businesses and households across the board.
The economic malaise is widespread. After all, few are immune to inflationary pressures.
But some businesses are better placed to deal with inflation than others.
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Regards,
Kiryll Prakapenka,
For The Daily Reckoning Australia
