BHP Billiton added close to 29 million mt of iron ore production in fiscal 2014-2015 but will only bring on around half this amount over the next 12 months as new supply from Australia’s “big three” iron ore producers starts to slow down.
The Anglo-Australian miner produced 254 million mt from its Western Australia operations in the year to June 30, 2015, up 13% from around 225 million mt the year before.
BHP said in its fiscal 2014-2015 operations review Wednesday that it expected to produce 270 million mt in the year to end-June 2016, driven largely by improved processing efficiency at its Mining Area C and Newman operations in the Pilbara region of Western Australia.
This would amount to an additional 16 million mt of new supply in fiscal 2015-2016.
By comparison, Rio Tinto added around 32 million mt of new iron ore supply from Australia in the year to June 30, 2015, though Rio works to a calendar fiscal year, compared with the corresponding period a year earlier.
It produced 295 million mt in the year to end-June compared with around 263 million mt the year before.
Rio said last week that it would produce around 340 million mt of iron ore from the Pilbara region in calendar 2015 and was likely to add another 20 million mt of output to reach its 360 million mt/year target in 2016.
Combined, this would see BHP and Rio bring on around 35 million mt of new production next year, while Fortescue Metals Group has said it will not go beyond current output levels of around 165 million mt/year. Fortescue will report its fiscal 2014-2015 iron ore production on Thursday.
Australia exported 717 million mt of iron ore in calendar 2014, up 137 million mt from the year before, while 2013’s exports were 88 million mt higher than in 2012, according to data from the Australian Bureau of Statistics. Next year is likely to see a fall in new export volumes out of Australia compared with 2013-2015.
The extent of Australia’s iron ore supply increase in 2016 will depend largely on how quickly Roy Hill is able to ramp up output at its new greenfield project in the Pilbara region.
Inaugural exports are tipped to start in September — though the project is only around 85% complete — with full production capacity of 55 million mt/year expected to be reached within 2 1/2 years.
HIGH MET COAL OUTPUT IN 2014-15
BHP reported a strong year for metallurgical coal production in Queensland in 2014-2015 with total output of 42.6 million mt, up around 14% from 37.5 million mt in the previous fiscal year.
BHP said its 50% share in the BHP-Mitsubishi Alliance (BMA) joint venture contributed 33.9 million mt in FY2015, up from 29.3 million mt the year before.
Output of 8.76 million mt at BHP Mitsui in 2014-2015, on a 100% basis, was up slightly from 8.3 million mt a year earlier.
In its operations report, the miner said the ramp-up of BMA’s Caval Ridge mine, along with productivity improvements, had contributed to the output increase in 2014-2015.
It noted that operations at BMA’s Crinum mine would cease in January-March next year as the mine reached the end of its reserves.
This would result in total Queensland production in 2015-2016 falling back to 40 million mt, BHP said.
In contrast to iron ore, most analysts are expecting global met coal exports to fall in 2016.
BHP said production from its 1 million mt/year Haju mine in Indonesia is expected to start in 2015-2016.
Source: Platts