Australia's BHP sets unambitious iron ore targets

: Metals
23/07/20

Australian resources firm BHP has set unambitious 2023-24 iron ore production targets for its Western Australian iron ore (WAIO) and Brazilian Samarco operations.

The firm's WAIO produced 285.3mn t of iron on a 100pc basis and its 50pc share of Samarco production in Brazil was 4.5mn t in the year to 30 June, but it set targets of 282mn-294mn t and 4mn-4.5mnt respectively for 2023-24.

WAIO sales were 4.6mn t behind production, with almost 4mn t of inventories waiting in Chinese ports at 30 June. The South Flank mine in WA's Pilbara region is on track to ramp up to 80mn t/yr by June 2024 and contributed to record lump sales from WAIO.

Total production at the Samarco project, which BHP owns with Brazil's Vale, was 9mn t in the year to 30 June because of higher concentrator throughput but is only expected to be 8mn-9mn t in 2023-24.

BHP produced 72.72mn t of iron ore on a 100pc basis at WAIO in April-June, up by 9pc from January-March, when output was disrupted because of Cyclone Isla and a fatal accident at the railyard at Port Hedland that closed WAIO operations. Production was higher than April-June 2022, but sales were lower as the firm continued to work on debottlenecking its port infrastructure.

The firm achieved an average received price of $99.88/wet metric tonne (wmt) fob Port Hedland during January-June, up from $85.46/wmt in July-December, but down from $112.65/wmt in January-June 2022. The Argus 62pc ICX cfr Qingdao index averaged $118/dry metric tonne (dmt) in January-June, up from $105.32/dmt in July-December but down from $139.62/dmt January-June 2022.

Proportion of lump sold rose to 31pc of total sales, from 29pc in 2021-22, on the back of South Flank output. South Flank, which largely replaces production from Yandi was designed to increase the average grade of BHP's ores from 61pc Fe to 62pc and its total proportion of lump sold from 25pc to 30-33pc.

The Argus ICX iron ore index was last assessed at $115.95/dmt cfr Qingdao on a 62pc Fe basis on 18 July, up from $107/dmt on 11 July, but down from $133.40/dmt on 15 March.

By Jo Clarke

BHP iron ore sales							mn t
	Apr-Jun '23	Jan-Mar '23	Apr-Jun '22	FY 23	FY 22	FY 23 target*	FY 24 target*

WAIO sales
lump	20.02	18.02	20.01	77.98	72.34
fines	42.90	41.18	44.31	170.90	178.34
total	62.93	59.20	64.31	248.88	250.69	246-256	250-260
total (100pc)	71.17	66.58	72.80	280.72	283.94	278-290	282-294
Brazilian sales (equity share)
Samarco	1.16	1.11	0.99	4.51	4.00	3 to 4	4-4.5
Source: BHP
* Target is for production not sales.

Iron ore prices ($/dmt)

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Australia's BHP sets unambitious iron ore targets

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