BHP lifts iron ore guidance

BHP Billiton has increased its full-year guidance for Pilbara iron ore production as the mining giant enjoys the benefits of its big-ticket expansion strategy.

A day after Rio Tinto reported record March quarter production, but blamed Cyclone Christine for holding back output, BHP this morning said the ramp-up of its Jimblebar mine had underpinned production of 163 million tonnes in the nine months to March 31.

Buoyed by the record performance, BHP increased its full-year guidance (for the year to June 30) by five million tonnes to 217 million tonnes.

Rio's target for this calendar year is 295 million tonnes while Fortescue Metals Group, the Pilbara's other big player, is also about to reveal its latest operating performance.

BHP today also increased its full-year guidance for metallurgical coal production while chief executive Andrew Mackenzie said petroleum liquids output had increased 16 per cent to 77 million barrels in the nine-month period driven largely by the performance of its onshore US operations.

"Our production agenda continues to deliver outstanding results, underpinning a 10 per cent increase in production so far this year," he said.

"Having achieved record iron ore and metallurgical coal production during the first nine months of this year, we have raised full-year guidance for both commodities.

"The strong contribution from our high-margin Gulf of Mexico operations and the predictability of (Chilean copper asset) Escondida's performance is also pleasing.

"We continue to expect cumulative production growth of 16 per cent over the two years to the end of the 2015 financial year."

Mr Mackenzie said BHP's efforts to rein in costs remained on track, with group capital and exploration expenditure to decline by 25 per cent this year and scheduled to fall further next year.

"By maintaining strict financial discipline and a focus on our four pillars of iron ore, copper, coal and petroleum, we continue to believe that an average rate of return of greater than 20 per cent is achievable for our major development options," Mr Mackenzie said.

BHP did not provide commentary on its attempts to sell the aluminium and nickel divisions.

Nickel output, at 112,300t, was broadly in line with the previous corresponding nine-month period. BHP left its full-year forecast for total saleable nickel production at the Nickel West operation unchanged.

Alumina output rose by 7 per cent to 3.9 million tonnes, helped by a record performance by the Worsley refinery near Collie. Aluminium production was up 3 per cent to 898,000t "however, challenging conditions in the aluminium industry continue to persist".

The West Australian

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