BHP breaks production records, driving profit
By Tan Hwee Ann Bloomberg News
Published: July 24, 2007
iht.com
MELBOURNE: BHP Billiton, the world's biggest mining company, posted record annual production in copper, iron ore and nickel, fueling what will be its largest yearly profit.
Output of copper, the metal that contributes the most to earnings, climbed 17 percent in the three months ended June 30 from a year ago, BHP said. Nickel production gained 15 percent and iron ore advanced 6 percent.
Rising metal prices over the last fiscal year probably lifted BHP's earnings ahead of Microsoft's $14.1 billion. Marius Kloppers, the incoming chief executive officer for BHP, wants to increase production by 10 percent a year to meet demand from China, the largest buyer of raw materials.
"It's a record year, and it's been up and up," said Gavin Wendt, head of mining resources research at Fat Prophets in Sydney. "With prices so high, BHP is just trying to dig as much as possible out of the ground. Brokers are upgrading their numbers from conservative assumptions."
For the year, BHP achieved annual output records for natural gas, alumina, aluminum, copper, nickel, iron ore, manganese and coking coal due to "strong demand," the company said. Annual production of thermal coal, diamonds and manganese alloy also rose. BHP is the world's third-largest iron ore seller and the largest exporter of coking coal.
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The company, based in Melbourne, will likely post a record profit of $14.3 billion for the year ended June 30, up from $10.45 billion a year ago, according to the average of 18 analyst estimates compiled by Bloomberg. BHP is scheduled to report earnings on Aug. 22.
The base metals unit, which includes copper, was the largest profit contributor in the first half, followed by petroleum. Stainless steel materials, which includes nickel and cobalt, was the third-largest contributor, and iron ore the fourth largest.
Petroleum product output rose 10 percent in the quarter from the previous three months, the second consecutive gain, BHP, the largest Australian oil and gas producer, said. It fell 1 percent from a year ago.
The economy in China, the biggest consumer of copper and steel, grew 11.9 percent in the second quarter from a year ago, the fastest in 12 years, the state statistics bureau said this month. China, the world's most populous nation, more than doubled copper imports in the first six months of 2007 from a year ago.
China accounted for 18 percent of BHP's sales in the first half, 36 percent more than the same period a year ago.
Production of copper, used to make wires and pipes, rose to 342,100 metric tons, from 292,600 tons a year ago, as its Escondida and Spence mines in Chile increased output. Production from its Olympic Dam mine in South Australia fell.
BHP Billiton agreed to lease about 60 percent of a tower in Perth being developed by Multiplex Group, the Australian construction company that built Wembley stadium in London. BHP plans to locate all its operating divisions for West Australia state in the planned building, Multiplex said. |
