BHP Fourth-Quarter Iron Ore Output Rises 8% on Expansions

(Bloomberg) -- BHP Billiton Ltd., the world’s biggest mining company, reported fourth-quarter iron ore output rose 8 percent on capacity additions and supply chain improvements.

Output was about 60 million metric tons in the three months ended June 30, from 56 million tons a year earlier, Melbourne-based BHP said Wednesday in a statement. This compared with a 61.5 million ton median estimate of four analysts surveyed by Bloomberg.

BHP forecasts total fiscal 2018 output to gain as much as 4 percent to between 275 million and 280 million tons. Production of 268 million tons was recorded in fiscal 2017, compared to an average estimate of 267.1 million tons among seven analysts’ estimates compiled by Bloomberg.

The producer expects to book charges of $546 million in in the second-half of fiscal 2017 connection with a six-week strike earlier this year at Escondida in Chile, the world’s biggest copper mine, according to the filing.

BHP declined 1.1 percent to A$24.82 at 10:10 a.m. in Sydney trading Wednesday.

Iron ore prices have rebounded since June on record crude steel production in China and surged Tuesday after Rio Tinto Group said it had cut forecasts for 2017 shipments on poor weather and rail maintenance work. Ore with 62 percent content delivered to Qingdao rose 3 percent Tuesday to $68.84 a dry ton, the highest since April 11, according to Metal Bulletin Ltd.

The steelmaking ingredient is forecast to decline in 2018 as supply additions from top producers, including BHP, outpace demand amid slower growth in China, according to Westpac Banking Corp.

Full-year petroleum production fell 13 percent, including a 26 percent decline at BHP’s U.S. onshore unit, according to the statement. The sale of some U.S. shale acreage is progressing, with a deal to divest a portion of holdings in the southern Hawkville expected in the current quarter, BHP said.

BHP is responding to a challenge from restive investors, led by Elliott Management Corp., to review its oil portfolio, overhaul the board and boost returns. Incoming Chairman Ken MacKenzie, who takes his post in September, is holding a series of global meetings to gauge shareholders’ concerns.

Petroleum output fell 7 percent to 52 million barrels of oil equivalent in the fourth quarter. That beat a 50.6 million barrel median estimate among five analysts surveyed by Bloomberg. Billionaire Paul Singer’s Elliott has called on BHP to review the status of the $22.5 billion oil division and consider a spinoff of U.S. assets, while other investors have pressed the producer to divest its shale operations.

To contact the reporter on this story: David Stringer in Melbourne at dstringer3@bloomberg.net.

To contact the editors responsible for this story: Jason Rogers at jrogers73@bloomberg.net, Keith Gosman, Jake Lloyd-Smith