BHP's Q2 report: Iron ore production exceeds expectations, copper misses, nickel woes persist
Mining giant BHP's second quarter report was relatively mixed. Here are the key takeaways.
Source: iStock
Mentioned
KEY POINTS
- BHP's iron ore production beat expectations but shipments fell short. South Flank on track for full capacity by year-end
- Copper production missed expectations but Oz Minerals integration successful
- Nickel operations under pressure, flags major writedown as prices fall
BHP (ASX: BHP) says the company had a "solid first half", with WA iron ore production up 5% quarter-on-quarter and first half copper production up 7%.
The production figures were relatively mixed against consensus expectations but likely eclipsed by downbeat economic data from China and the recent resurgence of the US dollar. BHP shares moved 1.8% lower as the market opened.
BHP 12-month price chart (Source: Market Index)
We'll be highlighting how BHP's second-quarter production figures fared against expectations as well as some of the key takeaways from each of its commodity segments.
Iron Ore
Production: 65.8Mt, up 4% quarter-on-quarter but down 2% year-on-year
Expectations: Slightly ahead of consensus expectations of 64.9 Mt
Average realised prices: US$103.7 per wet metric tonne for the first half of FY24, up 21% year-on-year
Key takeaways: While production was a small beat, quarterly iron ore shipments of 63.9Mt was well-below expectations of 72.2Mt. The South Flank project in WA officially opened in October 2021 and BHP says its on track to ramp up to full production capacity of 80 Mtpa by the end of 2024.
Copper
Production: 437.4kt, down 3% quarter-on-quarter but up 3% year-on-year
Expectations: Missed market expectations of 448.7kt
Averaged realised prices: US$3.66/lb for the first half of FY24, up 5% year-on-year
Key takeaways: Successful integration of Oz Mineral assets. Improved production across both Australian and Chile assets.
Met Coal
Production: 5.7Mt, up 2% quarter-on-quarter but down 18% year-on-year
Expectations: Below market expectations of 6.3Mt
Averaged realised prices: US$266.4/t for the first half of FY24, down 1% year-on-year
Key takeaways: There was a fatal injury on 15 January and investigations are underway. Operations at Saraji were suspended and expected to progressively restart over the coming days. Lower production was a result of a significant increase in planned maintenance across assets.
Energy Coal
Production: 3.9Mt, up 7% quarter-on-quarter and 35% year-on-year
Expectations: Ahead of consensus expectations of 3.2Mt
Averaged realised prices: US$123.3/t, down 65% year-on-year
Key takeaways: Strong operating performance (improved labour conditions and weather) enabled an uplift in production.
Nickel
Production: 19.6kt, down 3% quarter-on-quarter but up 11% year-on-year
Expectations: Slightly below expectations of 20.2kt
Averaged realised prices: US$18,602/t for the first half of FY24, down 24% year-on-year
Key takeaways: "The nickel industry is undergoing a number of structural changes and is at a cyclical low in realised pricing. Nickel West is not immune to these challenges. Operations are being actively optimised, and options are being evaluated to mitigate the impacts of the sharp fall in nickel prices," the company said in a statement.
