Major diversified miner BHP Billiton (ASX:BHP,NYSE:BHP,LSE:BLT) is on track to achieve record annual iron ore production after posting a 3-percent increase in the second quarter.
Production hit 72 million tonnes in the three months ended December 31, 2017, up from 70 million tonnes a year earlier. BHP, the world’s biggest mining company, said output rose on the back of improved rail and plant performance.
“A strong operating performance in the first half allowed us to capture the benefit of higher prices,” BHP Chief Executive Andrew Mackenzie said on Thursday (January 18).
The Melbourne-based company is maintaining its internal guidance at 275 to 280 million tonnes of iron ore in the fiscal year to June 30, 2018.
Earlier this week, Rio Tinto (ASX:RIO,LSE:RIO,NYSE:RIO), the world’s second-largest iron ore miner, reported record iron ore shipments of 90 million tonnes in Q4 2017. The company’s results were also attributed to ongoing productivity improvements to its rail network.
Iron ore prices performed moderately last year, with the benchmark 62 percent fines contract averaging $70 per tonne in 2017, according to Scotiabank’s Commodity Price Index. The bank expects prices to fall to an average of $60 in 2018.
Similarly, FocusEconomics panelists expect iron ore prices to pull back from current levels as a Chinese ban on steel production relaxes in the spring. They estimate that the average price will be $59.60 in 2018.
The most bullish forecast for the year comes from Oxford Economics, which is calling for a price of $70; meanwhile, BMI Research is the most bearish with a forecast of $55.
In its quarterly performance review, BHP also reported a 20-percent jump in copper output, supported by an increase in production at Chile’s Escondida, the world’s largest copper mine. Meanwhile, thermal coal output rose 10 percent and oil production fell by 6 percent, to 48 million barrels.
On Thursday, shares of BHP closed up 0.16 percent at AU$30.78 in Sydney. Shares of the company have increased 3.71 percent year-to-date.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.