[miningmx.com] — BHP Billiton reported a bigger-than-expected quarterly jump in metallurgical coal production from flood-hit eastern Australia, but warned that the flood impact would continue to hold back production for the rest of 2011.
BHP said metallurgical coal output jumped 19% from the previous quarter to hit 7.9 million tonnes, above expectations for 7 million tonnes, but output was still 28% below levels a year ago as mines continued to operate below peak capacity.
“While production did improve in the June 2011 quarter … we continue to expect production, sales and unit costs to be impacted, to some extent, for the remainder of the 2011 calendar year,” BHP said on Wednesday in its fiscal fourth quarter production report.
Australia’s central bank on Tuesday warned the recovery in coal exports after flooding in Queensland state earlier this year was taking “significantly longer than earlier expected”, and the return to full production could be delayed until early next year.
The slower recovery would weigh on growth and keep GDP expansion below forecasts, the bank warned, after the economy suffered its biggest decline in 20 years in the first quarter when extensive flooding hit coal exports.
West Australian iron ore output increased 7% on the quarter to 35.5 million tonnes, in line with expectations for 35 million tonnes. That took full-year production to 134.4 million tonnes, reflecting a rapid expansion programme underway to meet strong demand from Asian steel mills.
BHP said it ran its iron ore division in the June quarter at an annualised run rate of 155 million tonnes.
BHP is the world’s no.3 iron ore producer behind Rio Tinto and Vale of Brazil.
Although its iron division is bigger, analysts have focused on coal because of concerns over the company’s ability to ramp up production after the floods.
Coal is Australia’s second biggest export earner after iron ore, seen generating A$60bn worth of export revenue in fiscal 2012.
BHP’s close rival Rio Tinto warned last week that its Australian coal operations were still recovering from the floods. Rio has already lowered its hard-coking coal output guidance for full-year 2011 to 8 million tonnes from 9.3 million tonnes previously.
The heavy rains and cyclones that battered collieries in Queensland state’s Bowen Basin, where BHP Billiton mines most of its metallurgical coal in partnership with Mitsubishi Corp , took the greatest toll on output.
Rolling work stoppages at six of the BHP Billiton-Mitsubishi alliance’s seven mines, as union workers press for greater job security, are also impacting production.
The targeted mines have a combined production capacity of more than 58 million tonnes per year of metallurgical coal used to make steel and account for about a fifth of the global trade. Analysts have estimated a loss of between 500,000 tonnes and 1 million tonnes.
