BHP Billiton Cuts Metallurgical Coal Goal
January 17 2018 - 4:35PM
Dow Jones News
By Robb M. Stewart
MELBOURNE, Australia--BHP Billiton Ltd. (BHP.AU) scaled back
guidance for metallurgical coal production for the fiscal year and
warned of an impairment hit of up to US$350 million for the first
half, largely relating to the Escondida copper operation in
Chile.
The downward revision to the goal for steelmaking coal followed
a mixed first half for BHP, with copper output rebounding but iron
ore production steady and volumes for the petroleum and
metallurgical coal operations dropping. Still, the company stuck
with full-year production and cost guidance for petroleum, copper,
iron ore and energy coal.
BHP, the Anglo-Australian company that is the world's
largest-listed miner by market value, also said it is pushing ahead
with its plans to exit its onshore oil-and-gas portfolio and was
preparing to open "data rooms" for potential buyers by the end of
March, even as it continued to explore an initial public offering
or spin off of the division.
In the six months through December, BHP said petroleum volumes
fell 7% year-over-year to 99 million barrels of oil equivalent,
largely due to the impact of Hurricane Harvey and Hurricane Nate on
its U.S. operations.
Metallurgical coal output was down 4% on-year at 20 million
metric tons, as record production at four of the company's mines in
Australia's eastern Queensland were offset by lower volumes at the
Broadmeadow and Blackwater operations.
Iron ore volumes were flat on year at 117 million tons, while
copper production jumped 17% to 833,000 tons and energy coal
production rose 4% to 14 million tons.
For the full year, BHP said it now expected metallurgical coal
output of between 41 million and 43 million tons, down from an
earlier target of 44 million-46 million, due to conditions at
Broadmeadow and geotechnical issues resulting from wet weather at
Blackwater.
BHP said its underlying earnings before interest and tax were
expected to include impairment charges of US$250 million-US$350
million in the first half of the fiscal year, mainly related to
conveyers at the Escondida mine that are no longer to be used after
the completion of an expansion project at the site.
"The momentum we've built across the wider portfolio during the
second quarter will flow through to an expected stronger second
half operating performance," Chief Executive Andrew Mackenzie
said.
Prices for most of the commodities BHP extracts rose over the
half year. Averaged realized prices for oil were up 20% on-year,
copper prices were 33% higher and iron ore was up 4% on
average.
In August, BHP recorded a net profit of US$5.89 billion in the
12 months through June, a sharp improvement from a year-earlier
loss of US$6.39 billion when BHP absorbed an impairment hit on its
onshore U.S. oil-and-gas business and a charge for the fatal 2015
dam failure at the Samarco iron-ore operation in Brazil.
The world's big mining companies have restored profits after
years working to slash costs and as prices have rebounded for
commodities including iron ore and copper needed for everything
from high-rise apartments and office towers to power and
communications cables. Although growth in China has been cooling,
its demand for metals has remained strong, supported by stimulus
measures.
BHP said it continued to push ahead with a number of
alternatives to exit its onshore U.S. assets, and its rig count
there was likely to fall as it tailored plans to get the best value
from an exit.
The company in August said it would sell off its onshore U.S.
oil-and-gas operations, a shift in strategy for a company that
invested billions of dollars grabbing more than 838,000 acres in
shale-rich U.S. regions. The decision came after months of
campaigning by Elliott Management Corp., a New York hedge fund that
has called for sweeping changes and questioned the fit between
BHP's petroleum operations and businesses mining iron ore, copper
and other minerals.
Write to Robb M. Stewart at robb.stewart@wsj.com
(END) Dow Jones Newswires
January 17, 2018 17:20 ET (22:20 GMT)
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