BHP BILLITON’S iron ore expansion plan went full throttle in the second half of the year, with the miner posting record production from its West Australian mines and a 19 per cent rise in output.
The FTSE 100-quoted miner’s West Australian operation benefited from the early delivery of first production from the Jimblebar mine, which is expected to ramp up to 35m tonnes per year by the end of 2015.
“Strong operating performance across our diversified portfolio in the December 2013 half year delivered a 10 per cent increase in production and volumes are expected to grow by 16 per cent over the two years to the end of the 2015 financial year,” said chief executive Andrew Mackenzie, who joined the company in May 2013.
“By maintaining strict financial discipline and increasing internal competition for capital we intend to further differentiate ourselves by achieving a superior rate of return on incremental investment,” he added. “We also remain committed to actively managing our portfolio for value. This strategy leaves us well positioned to deliver a substantial increase in free cash flow and higher returns to shareholders.”
BHP and its peers have been ramping up iron ore production, remaining bullish in the face of a slowdown in demand from China, the world’s largest consumer of commodities. Simultaneously the companies have been looking to slash costs, having invested heavily in exploration assets during the commodities boom and now feeling the pinch from weaker commodities prices.
BHP is planning to spend $16.1bn (£9.7bn) this year, down from $22bn.
Metallurgical coal production soared 22 per cent in the second half, but petroleum missed analysts’ expectations, falling four per cent. Full year production guidance is retained for the firm’s petroleum, copper, iron ore and coal businesses.
Shares closed 1.1 per cent lower.