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  • In its quarterly report, BHP reports a slight drop in production due to planned maintenance and unforeseen weather conditions
  • Despite this, the company has hit the halfway mark and is on budget and schedule for production in 2021
  • At the end of the September quarter, the mining giant had six projects under development with an US$11.4 billion budget
  • Despite the news, BHP’s share price is slightly down 2.22 per cent, with shares trading at $35.24 apiece

BHP has had a strong start to the 2020 financial year with production meeting the company’s initial expectations. However, iron ore, copper, coal and nickel production all dropped.

In the September quarterly report, released today, BHP CEO Andrew Mackenzie stated despite a slight decrease in group production, the company remains on track.

“We delivered a solid start to the 2020 financial year through ongoing strong operational performance across our portfolio,” Andrew said.

“While group production for the quarter decreased slightly due to the expected impacts of planned maintenance and natural field decline in Petroleum, guidance remains unchanged and we are on track to deliver slightly higher volumes than last financial year,” he continued.

In terms of delivery, copper production came in at 430 kilotons representing a three per cent decrease during the quarter. BHP expected the slight decrease because of planned maintenance at its Olympic Dam copper asset.

Iron ore production also decreased by a modest three per cent since the June quarter with production at 61 megatons. The decrease was due to maintenance at BHP’s Port Hedland facility.

BHP also reported an over 20 per cent decline in coal production due to adverse weather conditions, and a 25 per cent decrease to 22 kilotons in nickel.

Due to Tropical Storm Barry hitting the Gulf of Mexico in July this year, total petroleum production decreased by 11 per cent to 29 million barrels of oil equivalent.

BHP has also reported exciting news for its South Flank iron ore project in the Pilbara region of Western Australia.

“The South Flank iron ore project is 50 per cent complete, with all our major projects on schedule and budget,” the company CEO said.

South Flank is anticipated to be one of the largest iron ore projects the world has ever seen.

The multi-billion project is on track for production in 2021.

Additionally, The BHP Board has approved a US$283 million investment for the development of the Ruby oil and gas project in Trinidad and Tobago.

At the end of the September quarter, BHP has six major projects under development (petroleum, copper, iron ore and potash), with a combined budget of US$11.4 billion.

The Jansen Stage 1 potash project in Canada will be presented to the Board for a final investment decision in February 2021.

For this decision to go ahead engineering and other works will need to be complete. The board has approved US$144 million for these activities.

A further US$201 million was approved to de-risk the project and prepare underground infrastructure.

Corporate updates highlight a potential US$3.8 billion increase in net debt over the 2020 financial year from the application of IFRS 16 ‘Leases’, new leases commencing in the year and a change in the definition of net debt to include fair value of derivatives.

BHP’s share price is slightly down by 2.22 per cent, with shares trading at $35.24 apiece as at 12:45 pm AEDT.

BHP by the numbers
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