BHP Announces Production Records in Six Products
By Gareth Tredway
25 Jan 2007 at 12:21 PM EST
resourceinvestor.com
JOHANNESBURG (I-Net Bridge) -- BHP Billiton [NYSE:BHP], the world's largest mining company by market value, said in its quarterly production report to end-December that it achieved record half year production records in six of its products on the back of increased customer demand.
The commodities with record production numbers for the quarter and the half-year were aluminium, alumina, copper cathode, iron ore and manganese. Molybdenum achieved a half-year production record.
At the operational level, the company achieved half year records at its Hillside, Bayside and Samancor operations in South Africa, as well as at its Australian operations, Worsley, West Australian Iron Ore, GEMCO and Hunter Valley Coal.
Operations in Mozambique, Pakistan and Suriname also achieved records.
Production of petroleum products, one of the company's highest earnings contributing divisions, was down 9% quarter-on-quarter at 27.52 million barrels equivalent.
Overall production for the half year was down 2% at 57.85 million barrels equivalent compared with the same period a year ago.
Production and sales of alumina for the half year and quarter ended 31 December 2006 were all time records.
Both half year and quarterly production records were achieved at Worsley due to continued ramp up of the Worsley Development Capital Project. Paranam achieved half year record production due to lower downtime and full utilisation of expanded capacity, while record quarterly production from Alumar also contributed to the strong result.
Aluminium experienced the third consecutive record half year production. All operations performed at record or near record levels, according to the company.
Copper production, which falls within the company's base metals division, recovered from strike-induced shortfalls in the previous quarter, to produce a record 300,700 tonnes in the quarter, 20% more than the three months to September.
Nickel production was up 9% quarter on quarter at 48,300 tonnes, with the half-year's production of 92,800 tonnes matching the previous year's production record.
Production of silver, lead and zinc were also down quarter-on-quarter, by 11%, 26% and 18% respectively.
Increased production at the company's recently expanded Western Australia Iron Ore operations were attributed as the main reason for the 5% increase in quarterly production to 25.37 million tonnes and 49.57 million tonnes.
In other carbon steel divisions, metallurgical coal production was down 3% quarter on quarter and manganese alloy production grew by 25% due to higher equipment availability and scheduled maintenance in prior periods.
Rising Costs
BHP Billiton warned in its quarterly development report to end-December that shortages of both skills and equipment have and will continue to impact project costs and schedules on mines around the world.
According to the report, capital costs for the company's Alumar Refinery Expansion in Brazil will rise by 40% on previous estimates and its commissioning has also been delayed.
“Cost pressures are due to increases in construction, electrical, instrumentation and labour costs and general overheads,” said the company.
Billiton's previous estimate in the middle of last year, was that its share of the expansion would cost $518 million and that the project would be completed in mid-2008. Now the forecast is for a cost of $725 million and that it will come on line in the second quarter of calendar 2009.
In late November, the company announced that capital costs at its Ravensthorpe Nickel Project in Australia would rise by 64% to $2.2 billion and that the project would be delayed from 2007 until the first quarter of 2008.
According to the latest report Ravensthorpe is in line with its revised schedule and budget and is 78% complete.
At the Atlantis petroleum project in the Gulf of Mexico, Billiton says that the capital cost is now estimated to be 50% higher at $1.5 billion.
On the plus side the company's Spence copper project in Chile was completed three weeks ahead of schedule while the budget is expect to be within the approved budget of $990 million.
Most other projects are on schedule and budget according to the report. During the half-year the company spent $153 million on mineral exploration around the world. $111 million of this was expensed, while $41 million of the amount that was capitalised was attributed to the Olympic
Dam expansion in Australia.
In petroleum exploration the company expensed $154 million during the half year, including $43 million that had been capitalised previously. With Resource Investor.
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