BHP, Rio battle heats up
The battle of the Pilbara giants intensified yesterday, with BHP Billiton announcing that like its major competitor Rio Tinto, it had set another production record and its expansion plans were on track.
In its quarterly production report released yesterday BHP said its export capacity at Port Hedland was ready to hit 220 million tonnes a year after the successful installation of a fifth car dumper at the port. Its ability to ship at those rates still awaits mine expansions, however, particularly the Jimblebar expansion due for completion next year.
BHP announced its results as new global Rio Tinto chief executive Sam Walsh indicated he would keep his foot on costs at Rio, issuing his first email to staff calling for "greater accountability and responsibility".
"Unlocking greater value for our shareholders, and other stakeholders, will mean we need to start to do some things differently but not lose sight of what we do well. This is about creating greater accountability and responsibility - we must treat the company's money like it is our own and act like owners of our businesses not managers," he said.
BHP iron ore boss Jimmy Wilson is still to find out who his new counterpart at Rio will be, but like his former rival Mr Walsh, Mr Wilson's division also beat expectations. Boosted by the new kit at Port Hedland, BHP's iron ore exports from the Pilbara hit 39.4 million tonnes in the December quarter, up 6.7 per cent from the previous three-month period. Although Rio saw its Pilbara exports fall 1.2 per cent to 49.7 million tonnes last quarter, it set an annual production record.
BHP said its predictions for a 5 per cent growth in exports for 2012-13 were unchanged. Shares in the mining giant gained 1.3 per cent, or 48¢ on the quarterly results, which were marginally ahead of analysts expectations in most of its commodity groups.
For the first half of the financial year, BHP's oil and gas production rose 4 per cent, compared to the same period the previous year, due to growth in the United States, thermal coal output lifted 7 per cent, with coking coal in line with the same period in the prior year -although it improved significantly quarter on quarter as a number of issues at its Australian mines were resolved. First-half copper production lifted by 14 per cent.
When it reports financials next month, analysts expect BHP to mirror Rio in writing down the value of some assets, particularly nickel and aluminium. Also awaited is some insight into the first impact of cost-cutting measures at both companies, as the pair try to slash billions from their operating budgets.
We must treat the company's money like it is our own and act like owners of our businesses not managers."
Rio Tinto chief executive Sam Walsh
