BHP Group (ASX:BHP) churns out robust production numbers, ups copper guidance

Summary

  • BHP has released a decent set of production figures for the March quarter. Petroleum and coal production on the rise.
  • Petroleum and Iron ore production guidance remains unaltered for the rest of the period, while the copper production guidance has been increased.
  • The Company has four major projects with a combined budget of US$8.5 billion under development.
  • Covid-19 impacted the copper production on its Escondida Project in Chile.

The global mining behemoth, BHP Group (ASX:BHP, NYSE:BHP) shared its quarterly production figures. The mining major achieved record thermal coal and petroleum production during the March quarter. The Company has kept the guidance unchanged for most of the commodities, except for copper and coal, which are revised.

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Good Read: Where will BHP Group’s share price go from here?

BHP achieved record production from its Western Australia Iron Ore (WAIO) project. Total iron ore production stood at around 59.9 Mt for the quarter, 4% lower than the previous one. Production was partially impacted by the weather conditions and planned maintenance work of the Ore Handling Plant and stacker at the Newman project. The FY21 production guidance is unchanged and is maintained in the range of 245-255 Mt.

Read here: Australian iron ore exports to hit record levels in 2020-21: Govt report

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Covid-19 impacted the operations at copper mines. At its largest copper producing project in Chile- Escondida, BHP performed at its reduced strength. The Company produced 391.4 kt of copper during the reporting period, 9% lower than the December 2020 quarter. BHP is hopeful of optimising the production at Escondida in the coming days and hence increased the production guidance to 1,535- 1,660 kt for FY21 from the earlier range of 1,510-1,645 kt.

More on copper: BHP Group (ASX:BHP) firing on all cylinders amid booming copper demand 

Amid improving demand for oil and gas, BHP fired its all cylinders to ramp up the crude oil production during the quarter. The Company managed to produce 25.4 MMboe during the last three months from its assets spread across the globe. The production was up by 7%, reflecting the higher share of production from its Shenzi Project in the U.S Gulf of Mexico.

In a significant post quarter event, the Company achieved its first natural gas production from the Bass Strait Barracouta Project in April. The milestone was achieved within budget and timeline.

The production guidance for petroleum is unchanged and is kept in the range of 95-102 MMboe for FY21.

Also read: BHP Group At Vantage Point to Leverage Strong Demand for Crude Oil 

With the booming demand for EVs, the demand for battery material is also shooting up. The mining companies are going all gaga over the exploration and production of these materials. Nickel is among one such metal that is seeing demand from the battery manufacturing industry, and BHP is all set to make the maximum out of the current demand scenario.

Nickel production was 20.4 kt, 15% lower than the previous quarter due to the scheduled maintenance of its Kwinana refinery. The Company has set a production guidance range of 85-95 kt of nickel for FY21.  

BHP has reduced the production guidance range for coal production for FY21. The Company achieved a production of 4.8 Mt, 34% up, for the energy coal. The higher production reflects the impact of the strike at Cerrejon during the previous quarter and lower volumes produced from the NSWEC because of the wet weather.

Metallurgical coal volume was in line with the production target at 9.6 Mt. The production guidance range of metallurgical coal has been reduced to 39-41 Mt, while for the energy coal, it has been kept in the range of 18-20 Mt.

Also read: FMG, BHP, and RIO Fly High on Soaring Iron Ore Prices

Major Projects under development

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BHP has four major projects with a combined budget of US$8.5 billion under development. In oil and gas division, Ruby Project in Trinidad & Tobago, South Flank Project and the Jansen Stage 1 project are moving smoothly on schedule and under budget.

On the Resolution Copper Project in the U.S.A, the U.S Department of Agriculture has directed the U.S Forest Service to repeal the Final Environmental Impact Statement (FEIS) and Record of Decision draft. The Company plans on more involvement with the natives and continues the study of the project.

Share Price Movement

BHP is down 1.9% in line with the market sentiments that are prevailing today, and it is trading at A$46.26.

Some other major energy and resource player  that are listed on the ASX are Santos limited (ASX:STO), Origin Energy (ASX:ORG), Woodside Petroleum (ASX:WPL), Caltex Australia limited (ASX:CLX) and Oil Search Limited (ASX:OSH), Rio Tinto (ASX:RIO), Forteacus Metals Limited (ASX:FMG).


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